CAE expects more growth despite ‘sharper’ competition
Order backlog reached a record $4.2 billion in Q4.
MONTREAL — CAE expects to maintain its position as a leading global commercial flight simulator supplier and training company and even grow its margins in the coming year despite the impact of “sharper” competition.
“Our progress in fiscal 2014 positions us well for the period ahead and we have a positive outlook for each of our three core businesses,” CEO Marc Parent said during a conference call to discuss its fourth-quarter results.
The Montreal-based company beat expectations as it earned $59.9 million in its latest quarter, up from $45.7 million a year ago, as margins improved and revenue edged higher.
Revenue for what was the company’s fourth quarter totalled $583.4 million versus $565.6 million in the same quarter last year.
Parent said the company is “back on track” with margins in civil aviation reaching high-teens in the second half of the year as predicted, including 17.9% in the fourth quarter. He foresees them going higher and beating the peak level of 19%.
“We maintained our market leadership in the face of sharper competition and we booked record full-flight simulator sales with a record backlog for the company overall,” he told analysts.
CAE’s order backlog reached a record $4.2 billion, paving the way for higher revenues to come.
For the full financial year, it sold a record 48 full-flight simulators, including eight in the fourth quarter, which are used to train commercial airline pilots and others.
Parent said utilization rates at its training centres should increase on higher demand and the ramp-up of new and redeployed simulators as the commercial aerospace cycle remains strong with robust air travel growth and high levels of aircraft deliveries.
“We see strong demand for our training solutions in North America, improving demand in Europe and stable demand in the emerging markets. Taken together, we are in a prime position globally as the market leader within a highly regulated industry.”
Despite the ongoing challenges in its military segment, CAE continues to bid on projects, seek new opportunities on existing aircraft types and add new ones to its mix.
“Our military business has proven to be resilient through some challenging market conditions and, as we consider our market position and the unique nature of CAE’s business, we expect to continue to be resilient and deliver good performance for the year as a whole.”
New core markets was affected by the downturn in the mining sector and investments on new health-care simulators but Parent said he sees growth in the second half of the year with the release of new products like the company’s maternal fetal simulator.
For its 2014 financial year, CAE earned $191.1 million compared with a profit of $140.7 million in 2013. Revenues increased to $2.11 billion from $2.03 billion.
Benoit Poirier of Desjardins Capital Markets said the stronger results were “positive” while the company reiterated its optimistic outlook for the coming year.
While CAE hasn’t yet said how many simulators it expects to sell next year, the analyst expects the target will be in the low 40s, which would still be considered “solid.”
© 2014 The Canadian Press