Bombardier Inc. wants to crack open strategically crucial emerging markets as it pushes ahead with a program to almost double its annual revenues and boost profit margins over the next several years.
Senior executives told analysts and investors Tuesday they want to transform the Montreal company into a truly global business, with a strong presence in key developing countries such as China, India and Indonesia, one that is less dependent on the mature North American and European markets.
The goal for the period beyond the next five years is to add between $10-billion (U.S.) and $16-billion of revenue to the current yearly total of about $18-billion, Bombardier president and chief executive officer Pierre Beaudoin said at an investor day in New York City.
Bombardier has invested heavily over the past few years in new product and is well positioned to benefit from that commitment over the next few years as the global economic recovery takes hold, he said.
The new 110-to-149-seat C Series narrow body jet – slated to enter into service in 2013 – should contribute between $5-billion and $8-billion to annual revenues, the company estimates.
But much work still needs to be done on the aerospace side to tap into lucrative emerging markets, where rivals Embraer SA and ATR have been soundly beating Bombardier in the regional-jet market, Bombardier Aerospace chief Guy Hachey acknowledged.
Bombardier has been too reliant on North America and Europe for sales of its CRJ and Q400 turboprops regional jets, Mr. Hachey said at an investor day in New York City. Sales have slumped and Bombardier recently had to cut CRJ and turboprop production.
Conceding that Brazilian archrival Embraer and French-Italian firm ATR have performed well this year in the developing world’s regional-jet market, Mr. Hachey said Bombardier has over the past nine months doubled the sales force in its commercial aircraft group. All of the additions are in emerging markets.
It is also working on providing more leasing options in order to attract customers who are shying away from buying, he said.
The company is also working hard to win a first order for its C Series aircraft in the key Chinese market, he said.
Bombardier has a total thus far of 300 firm orders, options and letter of intent for the C Series, with a geographically diversified customer base that includes Germany, Ireland, Sweden, Turkey, Russia, the United States and South Korea, he said.
On the rail side, Bombardier Transportation head André Navarri said the division is coping well with the European sovereign debt crisis, with a solid backlog that is not vulnerable to cancellations and mostly state-guaranteed financing in place.
“Most of what we will sell in 2013 is already in our backlog,” he said.
Many European countries need to replace and upgrade aging rolling stock, he added.
And Bombardier Transportation is making inroads in countries outside Europe, such as India, China and Brazil, he said.