Stockwatch – CAE to Divest Mining Unit to Focus on Core Business Units

Stockwatch – CAE Inc said it will focus  on Civil Simulation & Training, Defence and Security & Healthcare.

Montreal-based simulation and modelling technologies manufacturer and training services provider CAE, Inc. (TSE:CAE, Mkt cap 3.55B, P/E 18.48, Div/yield 0.07/2.08, EPS 0.73, Shares 264.02M) revealed a change in strategy as it published its first quarter results for fiscal year 2015. The company said it would be divesting its mining operation and focus its capital and resources on CAE’s three other core business units — namely Civil Simulation and Training (Civil), Defence and Security (Defence) and Healthcare.

CAE mining sumulator

Stockwatch – CAE to divest its mining business

CAE’s financial results for the first quarter, ending on 30 June 2014, show an increase in operating profit to $71.7 million, up from $61.6 million in the first quarter of last year. Revenue hit $526.2 million, up from $520.1 million in the same period last year. Net income from continuing operations registered a slight fall, landing at $43.8 million, compared to $44.7 million in last year’s first quarter.

Marc Parent, CAE’s president and chief executive officer, said the growth in operating results in the first quarter is entirely attributable to Civil. CAE’s Civil unit marked a 2% growth in revenue in the first quarter, reaching $308.9 million compared to $301.8 million last year. Operating income from the unit rose sharply by 32%, hitting $49.5 million, while last year it stood at $37.6 million.

The company’s Defence unit displayed stable revenue of $197.9 million, slightly down from the $198.8 million of last year. It registered lower operating income of $21.9 million, compared to $23.6 million last year, which could be explained with the varied programs implemented in the quarter and with the government’s repeated delays in decision-making, Parent said.

CAE’s Healthsector remained relatively flat, displaying revenue of $19.4 million for the quarter, a slight decrease from $19.5 million a year ago.

Parent remains optimistic, expecting stronger financial results in the second quarter and robust growth for the year.

Stockwatch – Recent deals announced by CAE confirm the company’s success in broadening its global reach and satisfying demand in Asia, the Middle East and Russia, as well as its improving position in North America. Aircraft renewals in the civil aviation sector will continue to pull demand for CAE’s products and services. Healthcare, although small, is showing early signs of attracting business.

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