Com Dev Reports Strong 2009, Expects No Drop-off in 2010

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PARIS — Satellite hardware builder Com Dev International of Canada reported sharply higher revenue and profit for the year ending Oct. 31 and reaffirmed earlier forecasts that its revenue would increase by at least 10 percent again in 2010.

Cambridge, Ontario-based Com Dev said demand for commercial telecommunications satellites worldwide remains strong and that a long-predicted market decline may not be as sharp as once believed.

In a Jan. 11 conference call with investors, Com Dev Chief Executive John Keating said 2010 may be as strong a year for commercial satellite orders as 2009. Com Dev counted 29 commercial and government satellites ordered in the 12 months ending Oct. 31 for which Com Dev was permitted to bid on work. The company won contracts for 20 of these satellites and has bids in for seven others.

Keating said that with the continued roll-out of high-definition television and signs that Ka-band broadband satellites may also find markets worldwide, 2010 could be just as good.

“It’s still looking pretty robust to us, particularly if the new services come along,” Keating said of the global satellite market for 2010. “There are things happening that we would not have expected last year or the year before.”

In a Jan. 11 filing with the Toronto Stock Exchange, Com Dev said that in revenue terms, 55 percent of its new orders in 2009 were for commercial satellites, 23 percent for civil government customers and 22 percent for the defense market.

Com Dev reported fiscal-year revenue of 240.4 million Canadian dollars ($224.2 million at Oct. 31 exchange rates), up 14.3 percent over 2008. Net profit, at 15.3 million Canadian dollars, was up 23.4 percent from the previous year.

Despite glitches in two unidentified Canadian government programs that eroded the company’s profit in the fourth quarter, the gross-profit margin for the year was 27 percent, up from 25.7 percent in fiscal 2008.

Company backlog stood at 163.3 million Canadian dollars on Oct. 31.

With Canadian government financial assistance, Com Dev is introducing a line of microsatellites for science and Earth observation, with the first use being for Com Dev’sexactEarth subsidiary to provide maritime traffic monitoring from low-orbiting satellites.

Com Dev is investing 35 million Canadian dollars to bring exactEarth’s Automatic Identification System (AIS) ship-monitoring service to the market with an initial constellation of three satellites to be in orbit by late 2011.

In late 2009, Com Dev announced an inaugural contract with a nongovernment customer for its AIS service. The company declined to name the customer but said the contract could be valued at $37 million or more over seven years.

Keating reiterated that the exactEarth AIS business would be profitable with annual revenue of just 15 million Canadian dollars. The company has said it believes the global space-based AIS market could be $100 million per year. While Com Dev and the Canadian government are financing the first three AIS satellites, the company envisions a six-satellite constellation. It is seeking strategic partners to build the remaining three satellites but believes a commercial service is viable even with just three satellites.

Keating said Com Dev remains hopeful that it will win a contract to build the search-and-rescue payloads for Europe’s Galileo navigation and timing satellites, the first 14 of which will be built by OHB Technology of Germany and Surrey Satellite Technology Ltd. of Britain. He said it would likely take several months before the prime contractors settle on their subcontractor choice.

“There is certainly a highly political influence in terms of decisions made in Europe,” Keating said. “Nothing we do in this regard is ever a slam-dunk. People do strange things [with the contract policy of] just return, deciding for example that work will go to Spain because it should go to Spain. But we’ve put a damn good offer on the table.”