Dassault Aviation: Purveyor Of France


Dassault Aviation (OTC:DUAVF) has supplied France with aircraft for almost a century now. This article is part of the aerospace series and introduces Dassault Aviation, compares Dassault with its peers such as Bombardier (OTCQX:BDRBF), General Dynamics (NYSE:GD) and Textron (NYSE:TXT) and concludes with an indication of the investment possibilities.


Dassault Aviation 2012 2011 2010 2009 2008
Revenue $5,439 $4,561 $5,833 $4,774 $5,184
Net income $704 $445 $369 $354 $530
EBIT $755 $520 $816 $588 $615
EBIT% 13.88% 11.39% 13.99% 12.31% 11.87%
FCF $889 $610 $1,544 -$602 -$228
EPS $69.41 $44.02 $36.43 $35.05 $52.30
Dividend $12.83 $11.73 $14.77 $12.14 $8.00
Dividend Yield 0.94%
ROA 4.91% 3.17% 2.44% 2.33% 3.93%
ROCE 10.93% 7.94% 12.66% 8.77% 10.44%
ROE 10.75% 7.23% 6.06% 5.85% 9.49%
PE (Price/Earnings) 20

Dassault Aviation is known for the military aircraft it produces for the French and other Air Forces, but the French military only provides 10% of the revenue now.

Focus is shifting from military to commercial. The successful series of Falcon business aircraft [bizjets] create 75% of revenue.

Dassault Aviation has 2 main divisions:


Defense 2012 2011 2010 2009 2008
Revenue $1,579 $1,228 $1,323 $1,354 $1,980

The defense division handles the MRO (maintenance, repair and overhaul) and upgrade of Dassault Mirage aircraft worldwide and produces the Rafale multirole fighter.

In the last decade military revenue has been decreasing. Maintenance of existing Mirage's worldwide and production of French Air Force and Navy Rafale's provided the bulk of revenue.

Unlike predecessor aircraft, no export orders for the Rafale were received; in 2012 however, the Rafale was selected by India for the Medium Multi-Role Combat Aircraft.

The first 18 aircraft will be built in France and the remaining 108 in India by Hindustan Aeronautics Limited [HAL] in India.

The technology transfer agreements are finalized, but the workload distribution between Dassault and HAL is still under discussion.

Considering the size of India's Air Force - and the large number of older Russian type MiG, French Mirage and British Jaguar aircraft it uses - the number of Rafale aircraft eventually being built will probably be more than the 126 ordered.


Falcon 2012 2011 2010 2009 2008
Revenue $5,439 $4,561 $4,455 $3,367 $3,192

Most of the Falcon business jets are smaller than other business jets built by competitors, but have a long range. A lot of customers are repeat-customers who previously operated older Falcon types.



Almost 97% of the Dassault Aviation shares are owned by:

  • Groupe Industriel Marcel Dassault (50.55%)
  • Airbus Group (OTCPK:EADSF) (46.32%)

This has the advantage of stabilizing stock, but a short or long squeeze may occur because of the limited availability.

Dassault Aviation is also a strategic shareholder of Thales Group (OTCPK:THLEF) with a stake of 26% and of Embraer (NYSE:ERJ) with 0.9%.


Dassault Aviation has a strong military division, which is a strategic industry for the French government. This will ensure that development and production will be kept intact at (almost) any price.

The Indian Rafale deal will generate a lot of revenue and the Rafale is still in the race for other arms deals abroad. Another possible candidate to select the Rafale are the United Arab Emirates, who already use the Mirage 2000.

The Falcon business jets are successful and have a broad range of returning customers. The deliveries have declined in the last years because in 2009/2010 orders were cancelled. The order book is increasing again and returning to normal.

Over the last decade Dassault Aviation has been developing a European Unmanned Combat Air Vehicle in cooperation with other European aerospace manufacturers: Finmeccanica (OTCPK:FINMY)(OTCPK:FINMF), Saab AB (OTC:SAABF), Airbus Group, Hellenic Aerospace Industry and RUAG [Switzerland].

In December 2012 the nEUROn made its first flight. In November 2013 Dassault Aviation and BAE Systems (OTCPK:BAESF) supplied the British and French governments with a proposal to jointly develop an UCAV. This indicates a new phase in the road towards production.


Unfortunately Dassault Aviation does not provide detailed financial information on business aircraft to make a financial comparison.

The comparison is based on delivered aircraft; these are more reliable figures than orders.

The main competitors are Bombardier (OTC:BOMBF)(OTCQX:BDRAF) and Embraer, who were compared in the battle for bronze, General Dynamics with the Gulfstream and Textron, which produces the Cessna business aircraft.

General Dynamics and Textron are being researched at this moment and will become the next articles in the aerospace series.

Dassault Aviation is one of the smaller players in the business aircraft market, with its own niche. Dassault generates a steady revenue with healthy margins.

(click to enlarge)2


Dassault Aviation is a difficult one. Although publicly listed it is in essence controlled by major shareholders Marcel Dassault Group and the Airbus Group. Dassault also has very strong links with the French government and is considered a strategic industry.

  • Stable revenue (which will probably grow);
  • Healthy margins;
  • Limited downside;
  • Stock priced at industry average with a PE of 20.

Because only about 3% of the stock is available it can be volatile, but when timed properly Dassault can be a profitable investment without much downside.


1. Financial data sources are from annual and other reports published by Dassault Aviation;

  • Exchange rate used: USD/EUR 1.38
  • Stock price used: USD 1364.44 / EUR 988.00

2. All charts are created by Confero.

Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.