Ultra Electronics Targets China Airliner by Adapting Weapons Kit

Ultra Electronics Holdings Plc (ULE), a maker of submarine-hunting equipment, is seeking work on the Chinese Comac C919 airliner as it looks to expand its non-military business to about 50 percent of total sales.

The company is seeking to provide landing-gear controls and fuel-tank safety systems through a joint venture with China Merchants Group, Rakesh Sharma, chief executive officer at Greenford, England-based Ultra, said in a phone interview today.

Ultra has been looking at commercial aerospace and other civil activities to help drive growth as defense spending has fallen in the U.S. and U.K. The company expects to reach about 50 percent of revenue from non-defense activities within the next three years, based on existing contracts, Sharma said.

The project to provide a system to suppress fires in aircraft fuel tanks would be a new business for Ultra, Sharma said.

“What we anticipate is this year we will get a small study contract and hopefully that will turn into a development contract,” he said.

The technology is derived from equipment Ultra provides to the military to eject bombs and missiles from combat planes using compressed air, Sharma said. That can be adapted to deploy nitrogen to stop a fire, he said.

Large Contracts

Ultra is also targeting work on an update that Embraer SA (EMBR3) plans for its regional jets, building on ties in providing equipment for the Brazilian planemaker’s KC-390 military transport. Brazil may become a foothold for Ultra to increase sales in South America, where Sharma said the company is trying to expand.

Ultra today reported a 4.8 percent increase in first-half pre-tax profit to 39.6 million pounds ($61 million) as revenue retreated 0.7 percent to 367.7 million pounds. The company said it is confident of meeting its expectations for the year.

The outlook for 2014 is showing signs of improving, Sharma said, with several large contracts in the pipeline. The company has moved to bid on larger deals by pooling resources more effectively, he said.

Ultra continues to pursue acquisitions and is performing due diligence on a target Sharma wouldn’t identify. Four more possible deals are being looked at amid a pipeline of about 40 targets. The possible purchases are mainly in the range of 5 million pounds to 80 million pounds, he said.

To contact the reporter on this story: Robert Wall in London at rwall6@bloomberg.net

To contact the editor responsible for this story: Benedikt Kammel at bkammel@bloomberg.net

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