For Ultra Electronics, 80% of revenue comes from defence sales and it's no surprise to learn that military budget cuts in the US and Europe, including Ultra's home market, the UK, are squeezing a company whose core capability has historically been in sonar technology. But what characterises Ultra is what now-retired chief executive Douglas Caster liked to describe as a "many eggs in many baskets" approach. As Caster's successor Rakesh Sharma, who was Caster's chief operating officer, noted this morning, not all defence products and technologies are in facing the same squeeze; some of Ultra's defence products are turning in growth and for others sales are declining but, overall, defence remains a growth sector.
In aircraft, defence is growth more slowly than civil, though, and that 80% defence weighting should decline to about 70% in the next few years. But Ultra sees all this in terms of an aerospace cycle that is yet to reach its civil growth peak, and which for all its potential has in fact been slow to return growth for suppliers like Ultra; Sharma points to delays on the Airbus A380 and Boeing 787 programmes.
Sharma stresses that while the company is naturally looking to develop its civil business it is absolutely not pursuing a strategy to "jump on the commercial bandwagon". Historically, civil business has been 20-30% of Ultra's total, so projections for the next few years aren't unusual, however much the aerospace industry as a whole is looking to commercial programmes to make up for slumping defence demand.
Indeed, Ultra in 2010 actually backed away from the Airbus A320 programme, for which it had developed landing gear computers. Sharma says Airbus didn't pay well enough to justify continued involvement by a company that is willing to sacrifice revenue that doesn't return acceptable margins.
What makes that anecdote notable is the widespread perception that chances to get into the commercial market are limited, as there are no new big civil programmes on the horizon now that both Airbus and Boeing have opted to re-heat their existing narrowbodies rather than develop clean-sheet aircraft.
For Ultra, though, that A320 work has turned up new civil opportunities. The company made a breakthrough in Japan when it was chosen to supply a landing gear system for the Mitsubishi Regional Jet, and Brazil looks promising, too - a 2011 highlight was Ultra's selection by Embraer, another new customer, to develop landing gear computers for the KC-390 military transport. Sharma hopes that doing a good job on that programme will open doors to Embraer's civil side.
China is another possible outlet for versions of this particular Ultra capability; Sharma sees the Comac C919 airliner and ARJ-21 regional jets as potential clients.
Ultimately, he notes that - echoing Caster's risk-spreading mantra - "it's very difficult to look at four or five programmes and say, 'that's Ultra'." The company's robustness comes from the fact that no programme accounts for more than 4% of revenue and 2012, he predicts, will be another year of steady growth.