Aircraft energy control systems and components manufacturer Woodward Governor has attempted to exploit the industry downturn by swooping for acquisition targets HR Textron (October 2008) and MPC Products (April 2009).

"One of our strategies was to forecast this downturn a few years ago, just looking at the economic indicators," says Woodward chief executive Tom Gendron.

"We did not anticipate the financial markets, but as a company we were prepared for a downturn.

"We cleaned up our balance sheet and went into this downturn net-debt free, with the intention that we were going to make acquisitions," he adds. "As we thought, a couple came up that I don't think otherwise would have done, so we were opportunistic on that."

Although no longer debt-free, Woodward is benefiting from a strong balance sheet, which enabled it borrow substantial sums to make its acquisitions at relatively low interest rates.

Woodward's diversified portfolio has also helped it cope with the recession: it has a significant aftermarket business supporting in-service airliners, as well as supplying equipment for new-build aircraft.

Sales to the US Department of Defense remain strong, although its activities in the business aviation market have been hit hard. "With the two acquisitions we've made, our exposure to military went up substantially," says Gendron.

"Combined, the two acquisitions had about 60% sales to the military, so...for aerospace sales we're probably approaching 35% military," he adds.

Woodward has avoided cutting back on research and development spending as it prepares for critical equipment-supply competitions expected in the next decade, as Airbus and Boeing move to replace their best-selling 150-seat narrowbody product lines.

"In the meantime we have very good content [on the Airbus A320 and Boeing 737], so as long as they keep producing them, that's a good thing." says Gendron.

On 10 August Woodward sold its fuel and pneumatics product line (acquired as part of the HR Textron purchase) to TransDigm for $48 million, in a move that Gendron says will allow the company to "focus on the areas of our new airframe business that are core to our future".

At a glance

  • Top 100 rank 91
  • HQ Fort Williams, Colorado, USA
  • Aero revenues $415.1m
  • Sales growth 13.8%
  • Operating margin 14.8%
  • ROCE 24.6%
  • Employees 5,823
  • CEO Tom Gendron


Source: Flight International