(Reuters) - The outlook for Bombardier Inc’s (BBDb.TO) European rail business remains strong despite the economic weakness and uncertainty gripping that region, a senior company executive said on Tuesday.
Helped by a large backlog and secure public financing for big rail projects in Europe, Bombardier Transportation (BT) remains on track to achieve its target for an EBIT (earnings before interest and tax) margin of 8 percent by 2013, President and Chief Operating Officer André Navarri said.
More than half of BT’s annual revenue comes from Europe, where it has major rail contracts in countries including Germany, France, Sweden and Switzerland.
The impact of economic weakness in Europe “will not be extremely volatile in terms of profit,” Navarri told analysts and investors at Bombardier’s investor day conference in New York.
“Most of what we will sell in 2013 is already in our backlog,” he said.
Navarri said he was confident that BT’s $33 billion order backlog was not in danger of contract cancellations. He could only remember one occasion in the past five to 10 years when a customer cancelled a contract because of a lack of funding.
With many of BT’s customers backed by governments, financing in most cases has already been secured, he said.
BT and Bombardier Aerospace are the two main units making up Montreal-based Bombardier. Each unit contributes about half of the group’s revenue, which totaled $17.7 billion for the full year ended March 2011.
Reporting By Nicole Mordant; Editing by Frank McGurty