UPDATE 1-AIRSHOW-Raytheon sees foreign sales at 30 pct of total in 2014

Mon Jul 14, 2014 11:00pm IST

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By Andrea Shalal

FARNBOROUGH, England, July 14 (Reuters) - Raytheon Co , maker of Patriot missiles and a range of other defense electronics, expects international sales to expand to 30 percent of its revenue in 2014, up from 27 percent last year, Chief Executive Tom Kennedy said in an interview.

Kennedy said the company hoped to continue expanding international sales beyond the 30-percent level by increasing its presence in Europe, Asia and the Middle East, adding more co-production agreements and beefing up its global supply chain.

"We're trying to drive that (increase). Every five percent is like a glass ceiling you have to break through," Kennedy said at the Farnborough air show. "To do the next step you have to have boots on the ground."

Raytheon executives plan 700 meetings with 1,800 people at the Farnborough Airshow about business in five key areas: air and missile defense, cyber, electronic warfare, communications, intelligence and surveillance, and "effects" or weapons like the small diameter bomb on the F-35 fighter.

On Monday, Britain's Ministry of Defence said its Sentinel surveillance aircraft that helped hunt for 200 missing schoolgirls in Nigeria would remain in service for three more years until 2018, with Raytheon set to improve the plane's software and make it better equipped for maritime surveillance.

The company also got a big boost last week when Poland short-listed Raytheon's Patriot missile defense system and a consortium of France's Thales and European group MBDA, in its competition for a new mid-range missile defense system.

It remains in the running for a large missile defense competition underway in Turkey, which recently asked bidders to extend their offerings through Aug. 30.

Kennedy said Raytheon was working with suppliers and cutting its own costs to ensure that it was able to maintain the pricing offered in its Patriot bid, and continued to work closely with the Turkish government on that offering.

He said Raytheon already used suppliers to provide components for other weapons systems in Turkey, and had offered Turkey substantial co-production prospects if it won the bid.

Turkey last year said it would negotiate with a Chinese firm for a new missile system, but later said it had not yet made a final decision after U.S. and NATO officials said the system would not be able to operate with NATO equipment.

In addition to pressing for more foreign sales, Raytheon remains focused on cutting costs, consolidating facilities and making its operations more efficient as it grapples with mandatory budget cuts in the United States, Kennedy said.

In the United States, Raytheon is awaiting details on how the Pentagon plans to upgrade the kill vehicles or warheads on ground-based interceptors used in its missile defense system.

The U.S. military on June 22 carried out its first successful test since 2008 of the new kill vehicle that is used on 10 of 30 ground-based interceptors that have already been deployed. Twenty other interceptors carry an earlier version of the Raytheon warhead, which failed in an test one year ago.

The Pentagon's chief weapons buyer, Frank Kendall, told reporters on Sunday he hoped to fund a much more reliable kill vehicle for the missile defense system run by Boeing Co, but said the acquisition approach would depend largely on cost.

Kennedy said Raytheon believed it could help lower the cost of the kill vehicle and improve its reliability by drawing on its experience with the successful Standard Missile-3, but said it would wait to see the Pentagon's requirements. (Reporting by Andrea Shalal; Editing by Mark Potter and David Evans)