A key Boeing [BA] executive expects 30 percent of the company’s defense, space and security (BDS) revenue to come from the international sector as the declining domestic defense market continues to challenge defense contractors.
Boeing Executive Vice President and CFO Greg Smith said Thursday the BDS business was at 15 percent international “not that long ago” and that the company will continue to pursue additional international growth.
“We continue to anticipate that going forward,” Smith told an audience at the Jefferies Global Industrial conference in New York.
Smith said Boeing, as part of a “market-based affordability” focus, has taken $4 billion out of BDS “infrastructure” with another $2 billion to go. This is in an effort to drive profitability across BDS while addressing a challenging marketplace, he said. Defense contractors are scrambling to offset declining revenues from Defense Department customers as sequestration-related budget caps reduce government spending.
Boeing Chairman and CEO Jim McNerney said in a July conference call with investors international BDS business represented nearly 30 percent of the company’s defense sector revenues during the 2nd quarter of fiscal year 2014 and remains at nearly 35 percent of the BDS backlog in sales.
McNerney said in the conference call the company is leveraging strong company-to-country relationships built over the years to support its BDS business. This has come, McNerney said, largely through relationships with its industrial base through its commercial business. McNerney said during the 2nd quarter of FY ’14 the BDS sector captured key contracts including a $1.9 billion order that included Navy and Royal Australian Air Force E/A-18 and F/A-18 aircraft and a $700 million order for five years of 737 airborne early warning and control (AEW&C) service support from the Royal Australian Air Force.
McNerney’s conference call remarks came from a transcript courtesy of the Seeking Alpha website.