Reuters | Export reform advancing: Northrop CEO
September 8, 2011 § Leave a comment
By Karen Jacobs and Soyoung Kim
Published: 7 September 2011
(Reuters) – Northrop Grumman Corp’s (NOC.N) chief executive on Wednesday praised a U.S. export-control streamline effort, only weeks after voicing fears that existing curbs could doom the fledgling U.S. industry making remotely piloted vehicles.
“I like what I see, I give a lot of credit to the U.S. It’s always hard to change a system that’s been in place for many decades,” CEO Wes Bush told the Reuters Aerospace and Defense summit in Washington.
Last month, Bush complained publicly that curbs on exports could cause the United States to lose its lead in unmanned technologies to other nations.
“The administration has been working hard on export control reform,” Bush said on Wednesday. “We’d all like to see it move faster, but I believe it is heading in a very positive direction.”
Northrop Grumman builds the high-flying Global Hawk surveillance plane.
“We do see international business as a very important part of our business,” Bush said. “We continue to work to find additional opportunities such as unmanned.”
Though he doesn’t set sales goals in percentage terms for international revenue, Bush said cybersecurity, logistics and intelligence monitoring and gathering were also areas in which Northrop had potential to boost international sales.
International sales currently account for 6 percent of Northrop Grumman’s overall sales, which totaled about $35 billion in 2010.
The Obama administration has been consulting Congress on plans to sell remotely piloted Global Hawks to South Korea, Reuters reported earlier this month, citing people familiar with the matter.
Northrop, which moved its corporate headquarters to Falls Church, Virginia, from Los Angeles this year, spun off shipbuilder Huntington Ingalls Industries (HII.N) in March and now focuses on unmanned aircraft and intelligence work.
“We are happy with the portfolio that we have,” Bush said.
Northrop has ramped up share buybacks and raised its dividend. While the company evaluates potential acquisitions, Bush said Northrop currently was not seeing a lot in terms of M&A candidates that could bolster its capabilities.
“I will tell you as we looked at M&A opportunities over the last few years, the valuations have been pretty high and so we’ve not been an acquirer to a very large extent,” Bush said.
GLOBAL HAWK INTEREST
On Wednesday, Bush said the U.S. State and Defense departments were working through foreign expressions of interest in Global Hawks, which were used this year in disaster recovery efforts in Japan after the March earthquake and tsunami and deployed during the Libya conflict.
Northrop acquired Global Hawk as part of its 1999 purchase of Teledyne Ryan Aeronautical, which had developed the high-altitude unmanned aircraft.
Michael Urfirer, co-chairman and co-chief executive officer with boutique advisory firm Stone Key Partners, told the summit that Global Hawk had few takers when its parent came up for sale back then.
“The whole theory at the time was drones, never going to happen,” as the Air Force was controlled by fighter pilots who were not seen as likely to embrace UAVs, said Urfirer, who was working on getting an M&A deal done for the company.
“We finally got Northrop to do it. It’s been a huge success for Northrop Grumman,” Urfirer added.
(Reporting by Karen Jacobs, editing by Matthew Lewis and Bernard Orr)