CAE poised to prosper from geopolitical tensions, higher defence spending
MONTREAL — Flight training specialist CAE Inc. says it’s poised to benefit from the arrival of Donald Trump to the White House and increased defence spending around the world.
“We have a unique situation geopolitically that we haven’t seen since the Cold War,” CAE chief executive Marc Parent said Tuesday during a conference call to discuss its third-quarter results.
Whether it’s fighting terrorism, responding to Trump’s push for countries to meet their NATO commitment or other military challenges, regions around the world are increasing their defence spending, he told analysts.
During a visit last week to Washington, Canadian Defence Minister Harjit Sajjan said the government may increase military spending.
Despite a slight decrease in defence revenues last quarter, CAE won a $200-million contract from Airbus to provide training over 11 years for 16 search and rescue aircraft for the Royal Canadian Air Force.
The Montreal-based company also was awarded last month more than $1 billion in contracts from U.S. and Canadian armed forces.
In the United States — where nearly a third of CAE’s 8,000 employees are based — the company said it’s well-positioned to profit from the new president’s electoral promise to increase the U.S. defence budget.
“The new administration in the United States are very focused on maintaining and increasing readiness and that in itself is driving a lot of activity,” he added.
CAE (TSX:CAE) beat expectations as its profits increased 21.8 per cent to $69.3 million, or 25 cents per share, in the third quarter as revenues were up 10.8 per cent to $682.7 million.
Excluding one-time costs, it earned $69.6 million or 26 cents per share in adjusted profits, three cents above analyst forecasts. That compared with $59.4 million or 22 cents per share a year earlier.
Civil aviation revenues increased 23 per cent to $412.8 million, but defence sector sales decreased four per cent to $412.8 million. Health sector revenues were $26.2 million a drop of 7.4 per cent.
The Canadian Press
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