Thursday November 5, 08:11 PM

INTERVIEW - Dassault: Revival not enough for growth

By Janaki Krishnan & Bharghavi Nagaraju

MUMBAI (Reuters) - French software firm Dassault Systems is seeing some early signs of revival after branching into new areas but it will not lead to business growth this year, its chief executive officer said on Thursday.

The global downturn in the auto and heavy industries sector had forced the technology firm to diversify into energy, pharmaceuticals, consumer goods and electronics, Bernard Charles told Reuters in an interview.

"This year has been quite a tough year. We don't consider this year as a good year per se," he said.

"However, we have accelerated our diversification because the heavy industry was slowing down."

"In such kind of a situation, we have kept all our resources ... and we are shifting step-by-step to new kind of industries successfully."

The new industries were yet to compensate for the slowdown in the company's core sectors in 2009, and the effect was likely to be seen next year, he added.

Dassault, which last month cut its sales guidance for 2009 after a "challenging" third quarter, is seeing a rise in the number of contracts, but they are of smaller sizes, Charles said.

"Companies are very careful about deployment of resources," Charles said. "It is too early to say. We see signs (of improvement). I don't think those signs translate to any business growth for us."

Europe, the company's largest market, had shown resilience against the global economic downturn, while its Japanese operations were yet to come out of the slump, said Charles, who is also president of the company.

Its diversification, especially into the pharmaceutical sector, was faster in the United States, its second largest market.

In October, German software giant SAP cut its sales outlook on weakness in emerging markets and in Japan, and Dassault did the same a day later, having already cut its guidance in April.

Dassault expects full-year revenues of 1.24 billion to 1.27 billion euros ($1.83 billion to $1.87 billion), 10 million euros below its former target range.

Dassault, whose clients include Boeing, Sony, Daimler, derives a large share of its revenue from automotive, aerospace and heavy engineering sectors. It is a leader in three-dimensional computer design software.

The aerospace sector was supported by Japan and China adding new airline programmes, but deal values were down.

"We do more transactions but they are smaller," Charles said.

Dassault, which counts state-run Hindustan Aeronautics Ltd as a client, is eyeing more projects in Indian aerospace, particularly in defence, he said, but declined to give further details.

(Editing by John Mair)

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