August 12, 2009 / 1:01 PM / 9 years ago

UPDATE 2-CAE profit hit by restructuring, CEO retires

* Quarterly EPS C$0.11 vs C$0.19 a year earlier

* Excluding restructuring charges, EPS C$0.18

* Analysts had expected EPS of C$0.16

* CEO Robert Brown retires, COO Marc Parent to succeed him

* Shares up 6.2 percent on the TSX (Adds details, share price, analyst’s comments)

By John McCrank

TORONTO, Aug 12 (Reuters) - Flight simulator maker and aviation training company CAE Inc (CAE.TO)(CAE.N) posted a lower quarterly profit on Wednesday, but results were largely in line with expectations after stripping out restructuring charges.

The company also announced that Robert Brown, its president and chief executive since 2004, will retire at the end of September and that Marc Parent, CAE’s chief operating officer, will succeed him. Brown will stay on as an adviser until the end of December.

“Although the move is happening a bit earlier than expected, the nomination of Mr. Parent was expected and should not signal any changes in CAE’s strategic direction,” Claude Proulx, an analyst at BMO, said in a note to clients.

CAE said its profit for its financial first quarter, ended June 30, was C$27.2 million ($24.7 million), or 11 Canadian cents a share. That was down from C$47.3 million, or 19 Canadian cents a share, a year earlier.

Excluding restructuring charges, CAE said its earnings were C$46.1 million, or 18 Canadian cents a share.

Analysts, on average, had forecast a profit of 16 Canadian cents a share, according to Reuters Estimates.

Shares in the company were up 49 Canadian cents, or 6.2 percent, at C$8.39 on the Toronto Stock Exchange late on Wednesday morning.

The company recorded a restructuring charge of C$27.2 million (C$18.9 million after tax) during the quarter, mainly due to severance and other costs, including pension expenses.

CAE said in May that it planned to lay off 700 employees, or 10 percent of its work force, to offset weakness in the aerospace sector. It said it would cut 380 positions in the spring, and the rest in the autumn.

It now expects the total cost of restructuring to be about C$32 million, which will be offset by cost reductions and one-time cost savings measures throughout the year. That was down from an initial estimate of about C$34 million.

The Montreal-based company said it expects C$15 million in recurring annual savings due to its restructuring.

Revenue slipped 2.3 percent to C$383 million in the quarter, with weakness in the company’s civil sector mostly offset by its military unit.

CAE said its military contracts totaled C$193.5 million in the quarter, while its civil aviation training and services unit signed contracts valued at about C$58.7 million.

CAE sold six full-flight simulators worth about C$90.7 million during the quarter. It said at the end of the previous quarter that it expected just 20 orders for flight simulators in the fiscal year, down from 34 the previous year.

“While some deterioration in the civil business was expected, we see the strength of the military business as positive, given that it should not be impacted by the current tough economic environment,” said BMO’s Proulx.

CAE’s order backlog at the end of the quarter was C$3.28 billion, up from C$2.85 billion a year earlier. ($1=$1.09 Canadian) (Reporting by John McCrank; editing by Peter Galloway)

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