CAE Inc. (TSE:CAE, Mkt cap 3.95B, P/E19.52, Div/yield 0.08/2.03, EPS 0.76, Shares 268.58M) has announced it is to cut 350 employees from its global workforce in the next 12 months, a move it believes will increase its competitive advantage.
The flight simulator and training company currently boasts 8,000 employees – meaning the job cuts will see a 4% deduction of its workforce – but CAE believes that ambitions to improve its production processes and revamp its business focus are only possible with a reduced headcount.
“This will ensure that CAE maintains a strong leadership position in a highly dynamic market and will create an even wider gap between CAE and its competitors,” said Marc Parent, its president and chief executive officer.
He added that the firm will go to great lengths in order to soften the blow for those employees affected by the changes.
Restructuring costs are expected to amount to $19 million, on top of the $5.7 million recorded in the company’s fiscal first quarter.
In the three-month period from April 1 to June 30, CAE saw its overall revenue climb 6% to $557 million, attributed to developments in its aviation and health technology arms.
Revenue from CAE’s defence and security business was relatively unchanged at $196.9 million but revenue from civil aviation training increased 9% to $336.2 million, while Healthcare contributed $23.9 million, up 23%.
Net income for the firm’s first quarter also saw a rise from 12 months ago, notching up to $44.5 million from $41.6 million. Excluding restructuring costs, net income would have been $50.6 million, up from $43.8 million.
CAE Inc. is a Quebec-based company that provides modeling, simulation and training for civil aviation and defence. Its operations are managed through five segments: Training & Services/Civil, provides commercial, business and helicopter aviation training for flight, cabin, maintenance and ground personnel and ab initio pilot training and crew sourcing services; Simulation Products/Civil, designs, manufactures and supplies civil flight simulation training devices and visual systems; Simulation Products/Military, designs, manufactures and supplies advanced training equipment and software tools for defense and security; Training & Services/Military, supplies turnkey training services, simulation-based integrated enterprise solutions and maintenance and in-service support solutions, and New Core Markets, designs and manufactures healthcare training services and devices and mining services and tools.
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