CHC Helicopter looks for global cost savings after foreign-exchange losses
DENE MOORE
Canadian Press
Tuesday, March 02, 2004
ST. JOHN'S, Nfld. (CP) - CHC Helicopter Corp. is looking for cost savings at its international operations to help offset foreign-exchange losses that led to an $8.1-million drop in revenue in the last quarter.
Company president Sylvain Allard said Tuesday that CHC took a $5.9-million restructuring charge but hopes to realize $11 million in savings from the reorganization of its European operations.
"As far as the restructuring in Europe, we're done," Allard told analysts in a conference call.
CHC recently consolidated the company's European operations, creating a single management structure and streamlining the workforce.
The 3,400-employee firm is the world's largest provider of heavy and medium helicopter services to the global offshore energy industry.
Now the company will evaluate recent acquisitions and operations in other countries, Allard said the day after the Newfoundland-based helicopter services company revealed lower earnings and revenues for its latest fiscal quarter.
"We're looking at other areas outside Europe where we can look at cost savings, obviously Schreiner being one," he said. "In terms of costs, it's too early to even say where that's going to be."
CHC announced in December that it had acquired Netherlands-based Schreiner Aviation Group in a $129-million cash deal.
Chief financial officer Jo Marc Zurel said in the coming months the firm will evaluate the Schreiner holdings, which currently operates as an autonomous subsidiary.
"Certainly within the next quarter to two quarters we should be able to give a little more detail on what we'd look to sell, but we don't want to be too hasty in making decisions on these things," he said.
CHC reported Monday it earned $9 million or 43 cents a share for the three months ended Jan. 31. That compared with a profit of $15.6 million or 76 cents a share for the same period a year earlier.
Quarterly revenue fell to $171.9 million from $180 million, due mainly to unfavourable foreign exchange and a soft market in the North Sea, where CHC does most of its business.
The company lost $13.9 million as the value of the Canadian dollar strengthened against the Norwegian kroner, the pound sterling and the U.S. dollar.
"It's important to keep in mind that CHC is an international company with virtually no Canadian-dollar revenue," Zurel said.
For the nine months ended Jan. 31, CHC earned $38.3 million or $2.15 per share on revenues of $518.2 million. That compared with a profit of $43.2 million or $2.47 per share on revenues of $546.7 million for the same period a year earlier.
Despite the dropping revenues, Allard said the third quarter was one of the company's best, thanks to the Schreiner acquisition and more than $700 million in new and renewed contracts.
CHC's core business is providing helicopter services to the world's offshore oil and gas companies. About two-thirds of CHC's more than $720 million in annual revenue is generated by offshore helicopter services, with the rest coming from air ambulance, search and rescue, onshore work and repair and overhaul services.
In trading on the Toronto Stock Exchange on Tuesday, CHC's class-A shares (TSX:FLY.A) fell three cents to $36.47.