CAE building core business while diversifying; wins new military contracts

CAE has seen recent growth from its diversification efforts into areas such as healthcare, but the Quebec based company is also growing its flight simulator and training business.

In recent years, Quebec’s CAE (TSX:CAE) seemed intent on showing how it could successfully diversify its business. In March of 2010, for instance, the company acquired three medical simulation product lines from Immersion (NASD:IMMR), which the company said would form will form the core offerings of CAE Healthcare’s newly established surgical simulation division.

On Monday, however, CAE proved it’s not forgetting about its core business. The company announced it had won a series of military contracts worth more than $110-million. Among other things, it will develop fixed-wing training devices for Canada’s CF-18 fleet.

Gene Colabatistto, CAE’s group president, military products, training and services said “The defence forces of more than 50 nations already use CAE as their training solutions provider and our customer base continues to grow as defence forces expand their use of synthetic training in order to reduce cost,” adding: “CAE’s advanced simulation solutions offer the ability to practise and rehearse dangerous mission scenarios safely.”

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CAE Inc., which was founded in 1947 in Saint-Hubert, Quebec has built its considerable business on the back of flight simulators. The company is the gold standard in the industry, having sold their simulators to over a hundred different airlines. CAE now trains more than 75,000 crew members each year, many at its at 426,000 square foot facility at the Dallas/Fort Worth International Airport, the largest business aviation training facility in the world.

CAE’s fiscal 2012 results, which were reported late in May, saw the company’s topline increase by 16%, to $840.9-million, from 2011’s $726.9-million. Annual revenue from the company’s “New Core Markets” division, which includes its mining and healthcare initiatives, were slightly less than 10% of total revenue, at $83.0-million, but were up 118% from the $38.0-million it did in 2011.

Shares of CAE Inc. closed today up 1.8% to $9.98.

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