Saudi projects offer promise

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Cavotec MSL Holdings has secured an $11 million-plus order for aircraft servicing systems and hopes it will lead to even more product sales, particularly in the Middle East.

The engineering group announced yesterday a contract to supply ground support systems for aircraft to two Saudi Arabian airports, at the capital Riyadh and coastal Jeddah.

The NZX-listed company has in recent years won good orders from Oman, in the Middle East, for its port service systems, based around a vacuum-based ship mooring system developed by Christchurch's Peter Montgomery.

Cavotec has also done recent work at Dubai International airport.

A New Zealand analyst is understood to have valued the Saudi contract at [Euro]5 million (NZ$11.65 million). Cavotec's Dubai-based division plans to complete the project over 18 months.

Cavotec MSL chief financial officer John Polatz said the Saudi airport sales included the provision of 53 integrated ground support systems.

"It's a pretty high-profile project for us. It's one of the largest ever for us in the airports division," Polatz said from his Switzerland base.

The "in-ground" systems were designed to deliver services to aircraft from below the tarmac, including fuel, power, water and conditioned air, particularly sought after in hot climates.

The systems, some of which pop-up out of the ground then retract flush with the apron surface after use, eliminated the need for service vehicles, diesel generators, cables and hoses that can cover an airfield, and also allow aircraft to turn off their engines for longer.

Cavotec also sells diverse engineering products to customers in the mining, tunnelling and general industry sectors. Annual sales for fiscal 2008 have been forecast at [Euro]143 million up from [Euro]130 million achieved in 2007.

Polatz said the company's order book remained "consistent", and could be buoyed by infrastructure spending programmes promised by governments responding to the world economic crisis.

The company's shares closed untraded yesterday and last traded at $2.97 at the lower end of a 12 month range of $2.94 to $4.97.

Polatz said the company's aviation revenues had grown with the recent acquisitions of California-based Dabico and Germany-based Meyerinck, which supply aircraft refuelling and fuel loading systems.

In 2004, the company bought Germany-based Fladung as an entry point into the airports sector, which now made up 18 per cent of its revenues.

Fladung will supply many of the components for installation at two Saudi airport hangars in conjunction with construction company Saudi Oger.

Late last year, Cavotec completed trials of its PCAir air conditioning system with aircraft manufacturer Airbus, putting Cavotec on the radar with many other airports, "because our air conditioning system is technically the only one in the world that can cool a wide-bodied jet in the Middle Eastern climate or the tropical climates," Polatz said.

"Cavotec's solution there is opening doors with other products of ours as well.

"There's a lot of infrastructure growth in Dubai, Bahrain, Qatar, Saudi - a lot of spending on airports and ports in general," Polatz said.

Overall, Cavotec had reduced its reliance on revenues from equipment supplied to the mining and tunnelling sector to around 14 per cent.

This sector had been hit by the downturn in hard commodity prices.

- © Fairfax NZ News