[Satellite News 06-08-09] Australian microwave technology company Codan hopes its recent $3 million acquisition of U.S.-based Locus Microwave will significantly enhance Codan’s prospects in the market, Mike Heard. Codan’s managing director, told Satellite News.
    The acquisition is a significant move for Codan, Heard said. “It gives the Codan group for the first time a U.S. design and manufacturing presence with excellent access to the rapidly emerging U.S. and other government X-band satellite communications markets. Codan has strong C-band and Ku-band microwave RF products and market share but nothing in X-band. Locus brings wonderful highly skilled and experienced people, and excellent X-band technology, products and market position,” he said.
    Locus, which generates about $20 million in annual revenue in the United States, also gives Codan access to the U.S. government satellite communications market and an opportunity to increase medium-term revenues, said Heard. “The decision by the U.S. government to move strongly into X-band, particularly via the deployment of the government owned [Wideband Global Satcom] satellites, and the Locus products and position to address that market, are very exciting.”
    Despite tough times economically, the company is scheduled to have a strong upsurge in profitability. “Codan is profitable. For the business year to 30 June 2009 our board has forecast a lift in underlying profitability (after restructuring expenses associated with the Minelab acquisition) of up to 20 percent compared to the previous business year. Locus is funded from existing debt facilities and we are comfortable with our balance sheet. However, given the uncertainties of the global recession we have embarked on a debt reduction program that includes the sale of surplus assets, particularly land and buildings that we are not using, and inventory reduction,” said Heard.
    Codan seeks to invest at least 6 percent to 10 percent of its revenue, depending on project cycles, in research and development each year. The company expects its release of a new range of C and Ku-band block up converters to be well received by the market and help shape the company’s future plans, which may call for future acquisitions depending on growth, Heard said.
    But Codan is not looking to rush forward as Heard admits it is not an easy time for company to do business right now. “Certainly we are seeing reduction in demand especially from the commercial satellite communications market, but other aspects of Codan’s business are holding up well and our efficiency protects us from significant reductions in profitability. Especially with Locus on board Codan will hold its own over the next twelve months,” he said.