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Covid-19: CAE's defence revenue falls 12% amid pandemic

Revenue in CAE’s Defence and Security segment fell 12% to CAD341.8 million (USD247.6 million) in the fourth quarter of fiscal year (FY) 2020, as the coronavirus disease (Covid-19) delayed programme execution and government contract awards, according to the Montreal-based training systems provider.

CAE’s headquarters in Montreal.

CAE’s headquarters in Montreal.

Defence programmes, including the achievement of key milestones, were hindered by travel bans, border and client access restrictions, and supply chain disruptions, CAE said on 22 May. Directives to shelter in place and cancel travel impeded the ability of government acquisition authorities to award new contracts.

To make matters worse, the drop in oil prices has slowed the pace of contract awards in Middle Eastern countries that depend on oil revenue, CAE said.

Operating income at the Defence and Security segment totalled CAD32.4 million in the fourth quarter, down 36.1% from the same period in FY 2019.

For all of FY 2020, the segment’s revenue rose 2% to CAD1.3 billion, while operating income decreased 20% to CAD104.8 million.

Including CAE’s Civil Aviation Training Solutions and Healthcare segments, total company revenue declined 4% to CAD977.3 million in the fourth quarter and increased 10% to CAD3.6 billion for the full year. Segment operating income plunged 14% to CAD146.5 million and surged 12% to CAD537.1 million for the year.

For FY 2021, which began on 1 April, CAE said it expects “a material decrease in operational and financial performance in the first half” and a potential rebound in the second half.

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