Héroux-Devtek's 2007-2008 Financial Year Off to a Good Start



    
    Gilles Labbé, President and Chief Executive Officer, informs shareholders
               that sales and profits should continue to grow
    

    MONTREAL, Aug. 2 /CNW Telbec/ - Héroux-Devtek Inc. (TSX: HRX), a leading
Canadian manufacturer of aerospace and industrial products, is anticipating
higher sales and profits in fiscal 2007-2008. Growth will be stimulated by new
contracts, profitable partnerships with world-class companies and higher
profit margins at the Gas Turbine Components Division.
    Gilles Labbé, President and Chief Executive Officer of Héroux-Devtek,
today delivered a resoundingly-enthusiastic message to shareholders at the
Company's annual general meeting. "We firmly intend to collaborate with our
clients, employees and suppliers to carry Héroux-Devtek to new heights. We
want to keep growing together," declared Mr. Labbé. He also thanked the
Company's shareholders for sticking it out when Héroux-Devtek's shares were
trading below book value. During the 2006-2007 fiscal year, the price of the
Company's shares climbed 93%.
    The Company also commented on its results for the first quarter ended
June 30, 2007. Sales totalled $78.8 million, up 18.8% from $66.3 million for
the same period last year. Sales were up 39.7% at the Aerostructure Division,
12.7% at the Landing Gear Division and 18.8% for the Industrial segment.
    The Company's operating income rose to $6.4 million or 8.1% of sales,
compared with $1.5 million or 2.3% of sales, in the same period a year
earlier. Net income amounted to $4.2 million or $0.13 per share in the first
quarter, compared with $0.7 million or $0.02 per share for the same period
last year.

    Market Review

    Mr. Labbé drew a positive picture of the various markets served by
Héroux-Devtek. In general, analysts tend to believe that the aerospace
industry growth cycle entered in 2005 could last longer than usual.
    Demand for large commercial aircraft remains robust. In the first six
months of 2007, Boeing and Airbus received over 1,200 orders, whereas more
than 1,800 were recorded for all of 2006 and over 2,000 in 2005. Many of the
orders are for popular new models like the Boeing 787 Dreamliner. "If you
order a 787 today, you will not get until 2013, maybe 2012, if you are lucky,"
Mr. Labbé says. The business jet segment of the commercial aerospace market
also continues to grow. In the first half of 2007, deliveries were up nearly
15% from the same period last year. In 2006, manufacturers delivered 885
units, 18% better than in 2005.
    There is also good news in the military sector. On June 18 of this year,
Héroux-Devtek signed an agreement with a potential value of $95 million with
Sikorsky Aircraft Corporation. The agreement calls for Héroux-Devtek to
design, develop, fabricate, assemble, test and deliver the helicopter's
landing gears and tail bumper during the CH-53K Heavy Lift helicopter Systems
Design and Development phase, which involves the production of eight
helicopters. Current program expectations are for the production phase of the
program to lead to 156 deliveries to the U.S. Marine Corps. This phase should
begin in 2013 and will be subject to a separate contract.
    Earlier this morning, the Company announced additional contracts
totalling over $14.5 million to supply landing gear components mainly for the
C-130, C-5, F-16, KC-135, E-3 and B-1B aircraft, essentially for the US Air
Force. This mandate will begin next year and extend over the next four years.
    The 2008 US military budget provides for total expenditures of US
$481 billion, 10% higher than this year's budget. Major programs of strategic
importance for Héroux-Devtek, like the F-35 Joint Strike Fighter (JSF), are
well underway. The JSF is considered the largest ongoing military program over
the next 20 years. "It will redefine multi-role fighter capability in the 21st
century", Mr. Labbé pointed out.
    The JSF project has also strengthened Héroux-Devtek's relationship with
Lockheed Martin, the prime contractor for the JSF. The Company is now one of
its major suppliers of structural components. Last March, Lockheed Martin
awarded Héroux-Devtek's Progressive Inc. business unit a multi-year contract
for the Low Rate Initial Production phase of the JSF project. In particular,
Progressive Inc. will build the inner wing bulkhead for the three versions of
the JSF F-35: the STOVL (short take-off and vertical landing), the CTOL
(conventional take-off and landing) and the CV (carrier version).
    Revenues for the first five years of the contract could be up to
$135 million. The second phase of the agreement, to last until 2028, could
provide Progressive with a share of approximately 50% of the structural
component business subcontracted out by Lockheed Martin.
    Conditions in the industrial segment continue to improve. The wind energy
sector is growing fast, with Héroux-Devtek's sales to that market reaching
$2.4 million. Installed capacity in Canada and the United States is expected
to increase by 30% in 2007. Globally, the installed capacity should reach
160 gigawatts by 2010, up from 74 gigawatts in 2006. Activity is resuming in
the industrial gas turbine sector. Héroux-Devtek's sales for this sector grew
by nearly 13% last year after four consecutive years of decline.

    Outlook

    "The solid order bookings enjoyed by large commercial aircraft
manufacturers bodes well for Héroux-Devtek. In addition, with the power
generation market further improving and the military aerospace market
remaining solid, business activities at both our Aerospace and Industrial
segments should pursue their upward trends. It is, however, important to keep
in mind that our second quarter has traditionally been a somewhat slower
period owing to seasonal factors, such as plant shutdowns and summer
vacations. Nevertheless, we continue to expect achieving approximately 10%
internal sales growth in fiscal 2008 as well as further profitability gains
from the lean manufacturing initiatives implemented in recent years. In light
of the continued strength of the Canadian dollar toward the US currency, we
must continue to improve or make productivity gains to maintain our
competitiveness," said Mr. Labbé.

    Profile

    Héroux-Devtek (TSX: HRX), a Canadian company, serves two main market
segments: Aerospace and Industrial Products, specializing in the design,
development, manufacture and repair of related systems and components.
Héroux-Devtek supplies both the commercial and military sectors of the
Aerospace segment with landing gear systems (including spare parts, repair and
overhaul services) and airframe structural components. The Company also
supplies the industrial segment with large components for power generation
equipment and precision components for other industrial applications.
Approximately 70% of the Company's sales are outside Canada, mainly in the
United States. The Company's head office is located in Longueuil, Québec with
facilities in the Greater Montreal area (Longueuil, Dorval, Laval and
Rivière-des-Prairies); Kitchener and Scarborough, Ontario; Arlington, Texas
and Cincinnati, Ohio.

    Forward-looking statement

    Except for historical information provided herein, this press release may
contain information and statements of a forward-looking nature concerning the
future performance of the Company. These statements are based on suppositions
and uncertainties as well as on management's best possible evaluation of
future events. Such factors may include, without excluding other
considerations, fluctuations in quarterly results, evolution in customer
demand for the Company's products and services, the impact of price pressures
exerted by competitors, and general market trends or economic changes. As a
result, readers are advised that actual results may differ from expected
results.




For further information:

For further information: Héroux-Devtek Inc.: Gilles Labbé, President and
Chief Executive Officer, (450) 679-3330; MaisonBrison, Martin Goulet, CFA,
(514) 731-0000

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Héroux-Devtek Inc.

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