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CAE’s Q2 profit dips on slower military, training deals

Nov. 8, 2012, Montreal - Flight training and simulator manufacturer CAE Inc. missed expectations Thursday as its net income dropped five per cent to $36.5 million in the second quarter despite rising revenues.


November 8, 2012
Carey Fredericks

The Montreal-based company says it was affected by slower summer training, integration of a recent acquisition and restructuring of
its military operations due to major cutbacks in Germany.

CAE earned 14 cents per share for the period ended Sept. 30, compared to 15 cents per share a year earlier when net profit was
$38.4 million.

Adjusting for $9.8 million in restructuring, integration and acquisition costs, it earned $43.5 million or 17 cents per share, up
from $41.1 million, or 16 cents per share in the prior year. Profits included a $8.3 million pre-tax current gain and $5 million gain on
the reversal of a liability related to a prior acquisition.

Revenues increased 19 per cent to $514.4 million from $433.5 million a year earlier.

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CAE was expected to earn 18 cents per share in adjusted profits on $526 million of revenues in the second quarter, according to analysts polled by Thomson Reuters.

The company is further restructuring its German operations at an estimated cost of $15 million due to a drop in demand for new
military orders in the country. The changes are expected to impact about 100 jobs.

With $2.7 billion of outstanding military bids, including $1 billion in the United States, CEO Marc Parent said he remains optimistic about CAE's long-term prospects, despite spending cuts in the U.S.

It expects civil training will improve in the second half the year and simulator sales are on track to increase from 19 so far to about 35 for the year.


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