Europe's EADS is ready to launch piecemeal acquisitions abroad to expand its defence business in the face of domestic spending cuts, its top defence executive said on Wednesday. In an annual review of the group's 5 billion euros ($6.71 billion) Defence and Security unit, the second largest after planemaker Airbus, divisional chief executive Stefan Zoller said EADS had enough cash to expand internationally despite a recent cost crisis.
"European growth is over. Whatever growth there is in the future will be global growth," he told a news conference. France, Germany and Spain - most of whose aerospace assets were combined to form EADS 10 years ago - have growing budget pressures and Britain, Europe's largest arms market, faces both a budget crisis and a defence review after upcoming elections.
EADS has meanwhile been hit by 4.2 billion euros in losses on the Airbus A400M military airlifter even after a financial lifeline from European governments, squeezing a cash surplus which stood at 9.8 billion euros at the end of last year. Zoller, whose division was ordered by the board to scrap a US acquisition worth an estimated $1 billion as EADS moved to conserve cash during the financial crisis, said EADS could now afford to expand but there were no specific deals in the works.
"There is enough cash to allow us to do what we want to do," he said. He declined to say whether the group was once again looking at targets in the United States where it paid $350 million for Californian security systems company PlantCML in 2008.
India is a key priority for expansion, he added. Zoller said the defence and security division, which is responsible for the EADS share in Eurofighter and missile programmes, had consistently outperformed its targets and aimed to improve on its 2009 margin of 8.4 percent. However margins will tend to "flatten out," having now reached an industry benchmark, he said, adding that 10 percent was a natural ceiling for profitability in the sector.