AAR Corporation – a US-based MRO, engineering and defence concern – reported a 5% decline in sales for the fiscal year to 31-May-2010, as the company’s aviation supply, MRO and structures/systems businesses all suffered from drops in revenue.
The pace of recovery in commercial markets over FY2010 was not as brisk as expected, according to Chairman and CEO, David Storch. As a result, sales declined 13.3% in AAR’s aviation supply chain business and 13.6% in its MRO business.
Balanced against this was a 4% improvement in the company’s systems business and a 11.8% increase in sales in AAR’s Government and Defence Services unit. Defence sales surges 82% in the final quarter, mostly as a result of AAR’s acquisition of Aviation Worldwide Services (AWS) this year and several new military business wins. Integration and operational performance of AWS is in line with expectations.
Fourth quarter performance was stronger overall, with commercial business revenue slowly returning. However, the company’s overall profits in the quarter declined 21%, mostly thanks higher overheads related to the acquisition of AWS.
AAR cut costs by 3.7% during the year, but remains focused on capturing new business as well keeping its balance sheet intact. AAR Corp maintains “substantial liquidity to seize additional opportunities” and is looking to benefit from its investments in support of its defence and government customers and from the recovery in the commercial markets through 2011.
AAR Corp shares rose 3.7% in trading yesterday. Earnings were USD0.29 per share, at the high range of the company’s forecast of USD0.25-0.30 per share, but lower than analysts expectations of USD0.31 per share.
Selected Original Equipment Manufacturers daily share price movements (% change): 13-Jul-2010
Selected Aviation Suppliers & Leasing daily share price movements (% change): 13-Jul-2010
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