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US nationalism not creeping into military contract loss: CAE

About $2.1 billion in outstanding contract bids should sustain business.


May 17, 2013
by CANADIAN PRESS

MONTREAL — Intense competition for US military contracts is driving down prices, but the head of flight simulator and training company CAE isn’t worried.

The Montreal-based company recently lost a hotly contested bid to supply a training system for the US air force’s new KC-46 tanker.

CAE chief executive Marc Parent said the tanker contract, which was awarded to FlightSafety, also attracted bids from L-3, Lockheed Martin and Boeing.

“Clearly everybody wants to win in the military. So, it does become at some point, as it was in KC-46, a price shootout, but I feel very good about our ability to win,” Parent said after reporting better-than-expected quarterly results.

He said CAE has about $2.1 billion of outstanding contract bids that should allow it to sustain its business.

“I don’t think we’re going to shoot the lights out, but neither do I think we’re going to go down that much,” he told analysts.

CAE said it earned $43.8 million for the period ended March 31, down from $53.2 million a year ago.

However, excluding $10.1 million of restructuring, integration and acquisition costs, it earned $53.9 million.

Revenue in what was the company’s fourth quarter grew to $587.9 million from $506.7 million last year.

Parent said US defence budget cuts have created more uncertainty, but it doesn’t change the company’s long-term outlook for its business.

For the financial year ended March 31, it earned $139.4 million or 54 cents per share on $2.1 billion in revenue, compared with $180.3 million or 70 cents per share on $1.8 billion in revenue the previous year.

Adjusted income was $190.7 million or 74 cents per share, four cents above analyst forecasts and the results a year ago.

Its order backlog reached a record $4.1 billion.

CAE sold 10 full-flight simulators in the fourth quarter and met its outlook by selling 35 full flight civil simulators last year. It expects strong demand for civil full-flight simulators again in the coming year.

© 2013 The Canadian Press