MONTREAL (Reuters) - Canadian plane and train maker Bombardier Inc, the rail industry’s fifth-largest signaling player by market share, expects to grow that business on higher demand for infrastructure projects, a transportation executive said on Monday.
Signaling, used to direct railway traffic, currently generates about 15 percent of Bombardier Transportation’s revenues, but it has accounted for double-digit growth over the last five years, outpacing the market, division president Laurent Troger said in an interview.
Signaling is required for rail infrastructure projects which are increasingly being expanded or developed globally. They also have the potential to generate higher profits for companies than rolling stock.
“Signaling is going to grow - there is no doubt about that,” he told Reuters, while speaking on the sidelines of the Global Public Transport Summit in Montreal.
Troger did not give any specific signaling growth targets for Bombardier, which competes against rivals like Germany’s Siemens AG that has a larger signaling business.
Bombardier Transportation plans to grow revenues from $7.8 billion in 2016 to $10 billion in 2020, with signaling and other services to make up a larger proportion of that target, he said.
Bombardier and Siemens have been identified in media reports to be holding talks to unite the companies’ rail operations, although such a tie-up would be difficult because of anti-trust concerns and questions over which company would retain control of the combined venture.
Over the past few years, all major European players have discussed mergers to better compete with Chinese rail giant CRRC which is expanding aggressively in both the United States and Europe.
Troger, who described Bombardier as an “observer” to the industry trend of consolidation, would not say whether a merger would be advantageous because of Siemens’s signaling activities, and dismissed the media reports as “speculation.”
Reporting By Allison Lampert; Editing by Chizu Nomiyama