MONTREAL – Flight simulator maker CAE Inc. stands to grow with a global upswing in military spending, chief executive Marc Parent said as the company reported its latest quarterly results.
Parent pointed to increasing defence budgets across NATO and allied countries, including a notably stronger commitment from Canada.
“Increasing defence budgets are driving demand for the advanced training and simulation solutions where CAE has a clear competitive differentiation,” Parent told a conference call with financial analysts on Wednesday.
The increase in military spending comes as U.S. President Donald Trump casts doubt on the future of the NATO military alliance.
Prime Minister Mark Carney has pledged to increase Canada’s defence spending to the two per cent NATO target by 2030.
The European Commission has also unveiled a plan to provide loans and allow member states to take on more debt to spend on defence, without triggering the restrictions the EU imposes on members with excessive deficits.
“Any capability that they deploy, whether it’s new aircraft, it’s new helicopters, it’s new ships, it’s new submarines, all that is going to require very significant and realistic training. So as Canada’s strategic partner, you know, I think we were going to continue to do very well in that market,” Parent said.
CAE was named in February a strategic partner to work with the Royal Canadian Air Force to design and co-develop the Future Fighter Lead-in Training program, which will prepare and train pilots to operate Canada’s advanced fighters.
In May 2024, CAE announced that SkyAlyne, its joint venture with KF Aerospace, won a $11.2-billion, 25-year contract for Canada’s Future Aircrew Training Program.
After the close of trading Tuesday, CAE reported a fourth-quarter profit attributable to equity holders of $135.9 million or 42 cents per share for the quarter ended March 31. The result compared with a loss of $504.7 million or $1.58 per share in the same quarter last year.
On an adjusted basis, CAE says it earned 47 cents per share in its latest quarter compared with an adjusted profit of 12 cents per share a year earlier.
Revenue for the quarter totalled $1.28 billion, up from $1.13 billion.
The increase came as civil aviation revenue amounted to $728.4 million, up from $700.8 million a year earlier, while defence and security revenue totalled $547 million, up from $425.5 million.
CAE shares were down $2.36, or more than six per cent, at $33.81 in mid-morning trading on the Toronto Stock Exchange.
BMO Capital Markets analyst Fadi Chamoun said CAE’s civil performance was modestly below expectations in the fourth quarter, but more than offset by defence.
“Ongoing aircraft delivery delays are slowing the pace of initial pilots training, particularly in the U.S., and weighing on training utilization rates and civil segment near-term outlook,” Chamoun wrote in a report to clients.
In its outlook, CAE says it expects its civil adjusted segment operating income to grow in the mid- to high-single-digit percentage range in its 2026 financial year, while its defence division is expected to post low-double-digit percentage growth.
National Bank analyst Cameron Doerksen said the civil forecast was “modestly below expectations” but that he saw some of the headwinds for pilot training demand growth as largely temporary.
“We remain confident in the multi-year growth story for CAE,” he wrote in a report.
This report by The Canadian Press was first published May 14, 2025.
Companies in this story: (TSX:CAE)
