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Gold/Mining/Energy : Magellan Aerospace Corp (MAL) New Listing -- Ignore unavailable to you. Want to Upgrade?

To: thomas gentry who wrote (464)	1/10/1999 7:04:00 AM
From: Anthony Wong	Read Replies (1) \| Respond to of 633

Magellan Aerospace Sees 1999 Revs Of C$510M-C$520M Magellan Aerospace -2: Niche Products Are Growth Area [01/06 article] TORONTO (Dow Jones)--Magellan Aerospace Corp. (T.MAL) believes the Turkish aerospace engine contract announced earlier Tuesday signals a new line of business for the company, and should help Magellan achieve revenues in 1999 of C$510 million to C$520 million. Richard Neill, president, told Dow Jones that this type of engine work will account for just 3-4% of 1999 revenues. As reported, the contract is valued at about C$70 million, with first deliveries under the contract scheduled for the middle of 1999. Neill said the company will report 1998 revenues of about C$420 million and net income of about 52 Canadian cents a share, both of which are in line with analysts' expectations. He said one analyst's earnings forecast for 1999 of 64 Canadian cents a share is "reasonable." He said he hopes that this type of engine work will account for about 10% of overall revenue in five to seven years. For 2000, Neill is forecasting revenue growth of 10-20% over 1999, which he said would provide a range of C$580 million to C$630 million. Magellan Aerospace Corp. (T.MAL) is starting to expand its business further into niche proprietary products because these products include higher gross margins, Magellan president Richard Neill said. Neill told Dow Jones that 70% of Magellan's business is in aircraft parts, a business which provides a gross margin of 20% to 25%. The other 30% of the company's business comprises niche proprietary products like the OE-600 V-8 engines involved in Tuesday's sale to Turkish Aerospace Industries. Neill said he couldn't disclose the margins the company has obtained with its propriety products, but said it is "somewhat higher" than on the parts side of the business. Peter Jackson, general manager of Orenda Recip, the Magellan subsidiary responsible for the OE-600, said the engine contract is a "big step" for the company. He declined to comment on whether there would be more contracts in the near future, but said he's been shopping the engine around to major North American small aircraft manufacturers. "We've certainly presented the engine concept to Cessna and Piper," Jackson said, adding that most prospective buyers would like to see the engine at work before they make a buying decision. Jackson believes the 600-horsepower engine is "well-positioned" in the marketplace because it has more power for the money than other engines in its class. Neill said developing more niche products like the OE-600 will help Magellan's year-over-year revenue growth. Noting that the company has relied on acquisitions for a large portion of its rapid expansion, he said Magellan is always looking for new acquisitions, but "there is nothing of significance close at hand." In Toronto trading Wednesday, Magellan Aerospace is up 0.30, or 3.7%, to 8.45 on volume of about 71,000 shares. -By Grant Ellis; 416-943-7800 (END) DOW JONES NEWS 01-06-99 01:09 PM