CAE reports bleak quarter as delayed shipments hit defense sales

·2 min read

(Reuters) -Aviation training specialist CAE Inc reported lower-than-expected quarterly revenue and profit on Thursday, as organic sales at the company's defense and security unit suffered from delayed parts supply.

Global supply chain disruptions including port and factory closures have hit sales at many North American manufacturers, prompting defense contractors such as Lockheed Martin Corp, a CAE customer, to lower their sales expectations for this year and next.

"We had lower organic performance in defense this quarter, reflecting delays in orders and program execution, particularly internationally, largely due to the pandemic," CAE Chief Executive Officer Marc Parent said.

Total sales from the defense and security unit, however, rose 38% in the second quarter, boosted by CAE's $1.05 billion acquisition of L3Harris Technologies' military training business in March. The unit is the company's biggest.

CAE's civil unit was hurt as deliveries of full-flight simulators slipped to 5 units from 10 units a year earlier.

The company has joint training ventures with airlines and aviation companies such as Emirates and Bombardier.

Saint-Laurent, Quebec-based CAE posted a net income of C$14 million ($11.14 million), or 4 Canadian cents per share, in the quarter ended Sept.30, compared with a year-ago loss of C$5.2 million, or 2 Canadian cents per share.

Excluding items, CAE reported a profit of 17 Canadian cents per share, missing average analysts' expectations of 20 Canadian cents per share, according to Refinitiv data.

Revenue rose 15.6% to C$814.9 million. Analysts on average had expected C$899.68 million.

Shares of the company fell 2.2% to C$39.49 in early trade.

($1 = 1.2568 Canadian dollars)

(Reporting by Nathan Gomes and Sanjana Shivdas in Bengaluru; Editing by Shinjini Ganguli)

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