MONTREAL - CAE says it plans to divest itself of its mining division to concentrate on its core business of providing simulation and training in aviation, defence and security.
The global flight simulator supplier and training company increased its dividend while reporting a slightly smaller first-quarter profit of $41.6 million on Wednesday.
The Montreal company will boost its quarterly dividend by a penny to seven cents per share effective Sept. 30, saying it's the fourth dividend increase in as many years.
CAE (TSX:CAE) reported earnings per share of 16 cents in the quarter, compared with a net profit of $45.6 million, or 18 cents per share, in the same quarter of the previous fiscal year.
Revenues were up at $526.2 million compared with $520.1 million year-over-year.
CEO Marc Parent said Wednesday he expects a stronger performance in the second half of the year for CAE and solid growth for the year as a whole, following the trend of the last few years.
He said after the annual meeting of shareholders that the decision to get out of mining was made after a strategic review and insisted that particular part of the company was not a problem.
"It's a business that's very profitable and interesting," he said, noting the turnover for the mining sector was $37 million for fiscal 2014 and $8.4 million in the first quarter of fiscal 2015.
The mining division has 190 employees, including about 20 in Montreal. The majority of revenues were generated by the "Datamine" analysis software.
"Our intention was to sell simulators to the mining sector," said Parent. "We gave ourselves a timeline. If we did not succeed within a certain period to reach a certain level...we would stop investing in this sector."
He also acknowledged that the mining sector has seen some difficult years.
"The price of metals has not been fantastic," he said.
Parent said there have been discussions with potential buyers but no timetable has been set.
"It won't be a fire sale."
The news of the decision was welcomed by analyst Cameron Doerksen of National Bank Financial, who noted the mining division had a $900,000 operating loss in the first quarter.
Doerksen said the mining sector has experienced difficulties and that growth prospects for CAE were limited because there were not many opportunities for significant acquisitions.
Revenue for the company's civil simulation and training division was $308.9 million in the first quarter, up two per cent compared with $301.8 million year-over-year.
In the company's defence simulation and training division, revenue was $197.9 million, compared with $198.8 million last year.
Revenue in CAE's health-care simulation segment, which offers such services as medical simulation scenarios, was $19.4 million for the quarter, compared with $19.5 million in the first quarter last year.