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CAE revealed it will be cutting about 300 jobs in its annual report today, despite recording strong revenue and profit growth over the year. The Montreal-based company said the cuts were necessary after military budget reductions in Europe had led to lower activity in that sector, and that it would be refocusing its resources and capabilities in response.
CAE is providing appropriate severance packages and other assistance to affected employees, the company said in a press release, adding that most of those affected had already been informed. It expects the cost of restructuring to be $25 million, which will be recorded mainly in the first half of fiscal year 2013.
Despite this, the company said there was a large pipeline of opportunities in defence, with increased business expected from high-growth regions such as Asia and the Middle East where countries are steadily modernizing their forces.
CAE recorded annual revenue growth of nine per cent in its civil segment and four per cent in its military segment, resulting in overall revenue for the fiscal year of $1.82 billion up from $1.63 billion last year. This equated to a net income of $180.3 million ($0.70 per share), compared to $160.3 million ($0.62 per share) last year.
We had strong revenue growth and margins in our civil business with record orders, and despite the challenges in defence, our military business finished the year with solid order intake, continued revenue growth and good operating margins, said Marc Parent, CAE president and chief executive officer.
In new core markets, we are on track to creating a sizable and profitable business beyond our core. Our strong cash flow, record order backlog, solid pipeline of opportunities, and recent acquisition of Oxford Aviation Academy give us confidence in CAE continued success.
The record order backlog includes $2.19 billion in the military segment, as CAE won a record level of U.S. defence contracts. These included orders for five C-130 Hercules simulators and a UH-72A Lakota helicopter training device, as well as an upgrade for the US Air Force KC-135 tanker aircraft simulators as part of the KC-135 Aircrew Training System program.
The company saw particularly strong activity in the civil sector, with 37 orders booked for full-flight simulators, along with training service contracts expected to generate $214.3 million.
