Boeing says 787 on track for delivery this year; earnings top expectations
Boeing Co. posted first-quarter profit that beat analysts' estimates as higher operating margins for commercial planes helped compensate for a drop in jet deliveries and the loss of a health-care tax benefit.
Net income fell 15 percent to $519 million, or 70 cents a share, from $610 million, or 86 cents, in the year-earlier quarter, Chicago-based Boeing said in a statement today. The average estimate of 20 analysts surveyed by Bloomberg was 64 cents. Sales fell 7.8 percent to $15.2 billion.
The company's operating margin rose 1.5 percentage points to 7.7 percent from the year-earlier quarter, which was hurt by a charge on the 747 airliner program related to lower production rates. Profit still may double this year amid "marked improvement" in the air-travel outlook, Boeing said.
"'Stability' is the one word I'd use to describe both financial and order performance," said George Van Horn, an analyst with Los Angeles-based research firm IBISWorld Inc. "The performance is stabilizing, and it's certainly well along in the process of getting it going in the right direction."
Boeing rose $3.19, or 4.3 percent, to $74.50 at 10:06 a.m. in New York Stock Exchange composite trading. The shares have doubled in 12 months. Fifteen analysts recommend buying Boeing stock, 10 say to hold it and four suggest that investors sell.
Deliveries dropped by 11 percent to 108 and a $150 million charge reduced earnings by 20 cents a share after Boeing lost a tax benefit under the new U.S. health-care reform law. Chief Financial Officer James Bell said in January that the first quarter of 2010 would be the year's weakest, making up 15 percent to 20 percent of the full-year's earnings.
Airbus SAS, the world's largest commercial aircraft producer, delivered 122 planes in the quarter. Boeing is the world's second-largest commercial-plane maker and the second- largest U.S. defense contractor. The health-care charge reduced Boeing's earnings forecast for the year by 20 cents to $3.50 to $3.80 a share, compared with $1.84 a share in 2009, the company said today.
Revenue will rise next year from an expected $64 billion to $66 billion in 2010, Boeing repeated today. Orders may benefit from airline passenger traffic growth, which will be at the upper end of a forecast of 3 percent to 5 percent this year, marketing chief Randy Tinseth said in an interview last week.
Last year's 142 net orders were a 15-year low. Boeing plans to restore production in 2011 after cutting it this year because of a drop in air travel during the recession.
Boeing repeated the scaled-back 2010 delivery schedule it gave in January, saying it would ship 460 to 465 jets compared with 481 last year. First-quarter deliveries fell after Boeing stopped shipping jumbo jets while building a new 747 variant and some planes were delayed because of defective seats from a Japanese supplier.
The company said it still expects operating cash flow to be zero this year after a negative $285 million in the first quarter. Cash flow may reach more than $5 billion in 2011 as revenue benefits from deliveries of two new models, the 787 and the 747-8, both due to enter service at the end of 2010.
Cash and marketable securities fell to $10.4 billion at the end of March, from $11.2 billion as of December, on spending on the development programs. Total consolidated debt remained at $12.9 billion.
The year-ago quarter benefited from recovery efforts as Boeing delivered planes that had been held up by a two-month strike at the end of 2008 that idled its airliner factories.
Boeing's commercial backlog fell to 3,350 planes valued at $250 billion, from 3,375 aircraft at the end of December, as deliveries surpassed new orders. The commercial unit's earnings rose 63 percent to $679 million while sales dropped 13 percent to $7.47 billion, in the absence of a year-ago charge on the loss-making 747-8 program.
The defense unit posted a profit decline of about 6.3 percent to $664 million, as sales decreased 1.4 percent to $7.61 billion.