MONTREAL — Flight simulator maker CAE Inc. saw profits fall six per cent last quarter due to the impact of the COVID-19 pandemic — and the turbulence isn’t over.
“As we look to the fiscal year ahead, we believe it will be a tale of two halves, with the first half of the year marked by sharply lower demand and major disruptions to our operations, and the second half slightly more positive as markets potentially begin to reopen and travel restrictions ease,” chief executive Mark Parent said in a release Friday.
The concerns follow “a material disruption” to the firm in the quarter ended March 31 as the pandemic continues to pummel the aviation industry amid border shutdowns and plunging demand, with most carriers imposing a pilot hiring freeze and broader cost reduction schemes.
The virus has hit the Montreal-based company’s civil aviation training business particularly hard. CAE kicked off its fiscal year last month with about one-third of its training centres around the globe closed and production at its main manufacturing facility in Montreal suspended.
The outbreak has also prompted delays in executing defence programs, CAE said.
Like many manufacturers forced to halt regular operations over the past two months, CAE pivoted to health care, assigning 500 employees to make 10,000 ventilators on a contract with the federal government. The product is in the final stages of certification by health authorities, CAE said.
Financial results last quarter were “solid” but the outlook is “weaker than expected,” said Desjardins Securities analyst Benoit Poirier..
The fourth quarter — usually CAE’s strongest — saw net income drop to $318.9 million from $340.1 million a year earlier.
Revenue slipped four per cent year over year to $977.3 million from $1.02 billion, the company said.
Earnings per share hit 46 cents, matching last year’s figure and beating analyst expectations of 41 cents per share, according to financial markets data firm Refinitiv.
While revenue from CAE’s civil aviation training business remained fairly flat at $601.9 million, its defence and security segment managed a 12 per cent revenue boost to $341.8 million.
For the full year, CAE saw net income fall six per cent to $318.9 million while revenue rose 10 per cent to $3.62 billion.
This report by The Canadian Press was first published May 22, 2020.
Companies in this story: (TSX:CAE)
Christopher Reynolds, The Canadian Press