China’s Cirrus Plane Deal Boosts Ten Cate Airliner ProspectsRobert Wall
Koninklijke Ten Cate NV, the Dutch maker of airframe parts for the Pentagon’s Reaper combat drone, said China is becoming a market for its advanced composite aircraft parts more quickly than it predicted.
Prospects for the Asian country got a boost when Zhuhai-based China Aviation Industry General Aircraft Co. acquired light-aircraft maker Cirrus Industries Inc. two years ago, said Frank Spaan, business development director at Almelo-based Ten Cate, which makes parts for the single-engine plane. Shares of Ten Cate rose the most in four months.
“The purchase of this company by Chinese owners opened that market,” Spaan said in a phone interview.
Ten Cate, which provides composite parts for the Airbus SAS A350 long-range airliner and materials for body armor, is trying to expand aerospace and automotive units at a time when U.S. spending on military clothing is waning. Ten Cate is building test structures for Commercial Aircraft Corp. of China Ltd., developer of the C919 airliner, to secure a long-term contract.
“We would expect later in the year to have our first real sales in China,” Spaan said. “That is more quickly than we ever would have expected.”
Ten Cate shares rose as much as 3 percent, the most since Nov. 6, and traded at 18.35 euros as of 10:36 a.m. in Amsterdam trading, valuing the company at 486.2 million euros ($632 million).
Business relations initially will involve exporting materials from either the U.S. or Europe to China, he said. The company also operates in China through its relationship with Fokker Technologies, the Dutch company acquired in 2008 by a private equity group led by Candover Investments Plc.
Ten Cate has made several acquisitions to strengthen its composite capabilities. European production was focused on thermoplastics although the purchase of Nottingham, England-based Amber Composites Ltd. this year is bolstering its thermoset material capabilities to complement those in the U.S. The Dutch company competes with Akzo Nobel NV as well as Cytec Industries Inc.
Industrial markets are drawing more interest, with Spaan expecting to book the first sales of flexible composite pipes for the energy sector this year.
“The oil and gas industry is of growing importance for our company, as well as mining,” he said.
Defense remains a potential growth area even faced with the U.S. military cuts linked to the withdrawal of front-line troops from Afghanistan, Spaan said. Sales of clothing to provide fire-protection of non-combatant troops and sales to other militaries, such as British and Australian forces, will also help offset the U.S. slowdown.