MDA Component Sales Sag but Radarsat-2 Business Looking Up

PARIS
—
Canada
‘s MacDonald, Dettwiler & Associates Ltd. (MDA) on July 29 reported higher revenue and profit in its space-hardware and services division and said demand for access to its Radarsat-2 radar Earth observation satellite is picking up quickly.

Richmond, British Columbia-based MDA, prime contractor on Radarsat-2 and builder of the satellite’s ground-access stations, said its commercial telecommunications satellite component business, based in
Montreal
, appears to be suffering from a dip in commercial demand as a result of the broader economic downturn.

Other companies involved in the commercial satellite sector say demand so far this year has remained as robust as it was in 2008 and shows no sign of subsiding despite the macroeconomic climate.

In a July 29 conference call with investors, MDA Chief Executive Dan Friedman said the company has already signed contracts to provide 12 Radarsat-2 ground installations worldwide, seven of which are already in operation.

Friedman declined to give specific revenue targets for the Radarsat-2 business, but said that, a year ago, the less-capable Radarsat-1 satellite was generating five times the revenue of Radarsat-2, which was launched in December 2007 and entered commercial operations in late April 2008.

Today, he said, the positions have been reversed, with Radarsat-2 generating five times the revenue of Radarsat-1. By the end of 2009, Friedman said, the ratio will be 10 to
1 in
favor of Radarsat-2.

Recent Radarsat-2 contracts include an agreement with the 18-nation European Space Agency to provide images as part of
Europe
‘s Global Monitoring for Environment and Security (GMES) program. MDA officials hope
Canada
, which is an associate member of the European Space Agency, can secure a permanent foothold in the nascent GMES program.

The 14 month contract, which started in July, is valued at 4.6 million Canadian dollars ($4.23 million).

In late June, MDA signed a contract with the Canadian Department of National Defence, valued at 25 million Canadian dollars, to provide maritime surveillance using Radarsat-2 data as part of a program called Polar Epsilon.

The Canadian government’s increased focus on Arctic monitoring led to a separate study contract with MDA, valued at 4.3 million Canadian dollars, to design a future two-satellite Polar Communications and Weather Mission.

Two satellites in highly elliptical orbit, with their apogee over
Canada
‘s northern region, would provide meteorological and communications services. Friedman said MDA is optimistic that Canadian authorities will move forward with full-scale development after an initial study phase.

MDA also builds ground stations for optical Earth observation satellites, and in June announced a multimillion-dollar contract from DigitalGlobe Inc. of
,
Colo.
, related to that company’s WorldView-1 and WorldView-2 satellites. It was the fifth such order from DigitalGlobe.

MDA’s
space activity is included in the company’s Information Systems division, which reported 220 million Canadian dollars in revenue for the six months ending June 30, up 9.7 percent from the same period a year ago. EBITDA, or earnings before interest, taxes, depreciation and amortization, was 22.3 percent of revenue, up from 21 percent a year earlier.