Bet Shemesh Engines (TASE: BSEN) announced this morning that it had signed a $22 million long-term framework agreement with German aerospace manufacturer MTU to supply blades in 2006-2011.
The agreement is in addition to a $50 million contract signed in December 2004 for the supply of spare parts for jet engines to MTU over seven years.
MTU is the leading jet engine manufacturer in Germany, with annual turnover of €1.8 billion. The company supplies engine parts to jet engine manufacturers and military and civilian aircraft fleet operators.
In addition, Bet Shemesh Engines and MTU are partners in a project to produce a jet engine for the Dassault Falcon 7x executive jet. Bet Shemesh Engines is expected to receive $100 million in revenue from the project over the next 35 years. The agreement between Bet Shemesh Engines and MTU stipulates that $8 million worth of products for the project will be made by Livnica Preciznih Odlivaka (LPO), a Serbian subsidiary of Bet Shemesh Engines acquired in early 2003.
Bet Shemesh Engines’ sales to MTU in 2004 totaled $3 million. The latest agreement will make MTU one of Bet Shemesh Engines’ main customers, together with the Israel Ministry of Defense, General Electric (NYSE: GE), and Pratt and Whitney.
Beit Shemesh Engines CEO Avner Shaham noted that the agreement constitutes a further step in the company’s strategy of obtaining work under long-term framework agreements. As well as making MTU a strategic customer of Bet Shemesh Engines, the latter will become one of MTU’s main suppliers of rotating parts, especially blades. Shaham added that channeling part of production to his company’s Serbian subsidiary would guarantee LPO work in the coming years, following LPO’s recovery plan since it was acquired.
Published by Globes [online] - www.globes.co.il - on June 27, 2005