Although it represents less than five per cent of the company's civil simulation and training revenue, CAE said lower crude prices could mean a slowdown for the helicopter operators that service the offshore oil fields around the world.
CAE chief executive Marc Parent said Friday offshore operators have held up "pretty well" so far, but that could change if prices remain lower over the long-term.
"I wouldn't say that it's huge right now in terms of offshore operators but definitely it could," he said during a conference call to discuss its third-quarter results.
Major oil companies have slashed capital spending plans in recent months in response to the sharp drop in the price of oil. The price of crude, which has moved higher in recent days, remains less than half of its highs of last year.
Overall, Parent said the company will benefit from lower crude prices because they have helped to depreciate the Canadian dollar.
CAE said it is optimistic for a strong second-half of its financial year after its net income attributable to shareholders increased 15 per cent to $53 million in the third quarter. It said civil aviation market fundamentals remain strong despite softness in Europe and the defence market continues to be resilient.
The company earned 20 cents per share for the three months ended Dec. 31, one cent above analyst expectations. That compared with a profit of $46.1 million or 18 cents per share a year earlier.
Revenue increased 11 per cent to $559.1 million and the total order backlog reached $5 billion.
The civil aviation segment's operating income increased 19 per cent to $53.8 million on $322 million of revenues from the sale of 18 full-flight simulators and new training contracts.
Health-care simulation segment earnings more than doubled to $500,000 on $21.3 million of revenues.
Defence segment profits slipped to $28.6 million from $31 million despite a nearly seven per cent increase in revenues to $215.7 million.
The company expects defence grow longer term as its military backlog is $2.4 billion and it has bid on nearly $2 billion worth of contracts.
CAE said the $19.8-million acquisition of Bombardier's military aviation training business will allow it to provide live military training in Canada and to NATO allies and position it to bid on foreign contracts.
It will also put the company in the mix as Canada determines its future pilot training system and decides which new fighter aircraft it will buy.Suggest a correction