CAE Defense and Security Growth Offsets Civil Aviation Decline
Defense and Security gross profit rose 20% to 500.6 million Canadian dollars for the fiscal year ended March 31, 2026
The training and simulation provider CAE Inc. (CAE) reported a divergence in segment performance for the fiscal year ended March 31, 2026, as growth in its defense business countered a downturn in civil aviation.
Defense and Security gross profit rose 20% to 500.6 million Canadian dollars, up from 416.5 million Canadian dollars the previous year. This growth extended to the segment's adjusted operating income, which increased 33% to 200.2 million Canadian dollars from 150.5 million Canadian dollars in the prior year.
Civil Aviation experienced a decline across key metrics. The segment's gross profit fell to 890.2 million Canadian dollars, down from 883.6 million Canadian dollars in the prior year. Adjusted segment operating income for Civil Aviation dropped 12% to 510.5 million Canadian dollars, compared to 581.5 million Canadian dollars a year ago.
Overall operating income for the company fell 16% to 612.3 million Canadian dollars. The company said this result included 14.0 million Canadian dollars in executive management transition costs and 84.4 million Canadian dollars in restructuring, integration, and acquisition costs. The prior year's operating income had included a 72.6 million Canadian dollar gain on the fair value remeasurement of SIMCOM.
Adjusted segment operating income for the company totaled 710.7 million Canadian dollars, a 3% decrease from 732.0 million Canadian dollars in the previous year.
Net finance expense decreased 2% to 212.1 million Canadian dollars. The company attributed this decrease to lower finance expenses on long-term debt resulting from decreased borrowings aligned with deleveraging undertakings. These savings were partially offset by higher lease liability expenses for training network expansions and borrowing costs for the SIMCOM transaction.
CAE operates a global network with approximately 90% of its revenue generated from international activities, primarily denominated in U.S. dollars and Euros. The company said that appreciation of foreign currencies against the Canadian dollar creates a positive translation impact, while devaluation has the opposite effect.
The company has initiated a multi-year transformation plan to simplify its structure and sharpen its focus.