Bombardier forecasts 10% revenue boost in 2019 in wake of layoffs
Bombardier Inc. says its largest business jetliner, a massive rail backlog and aftermarket services will propel the plane-andtrain maker to 10-per-cent revenue growth in 2019, roughly in line with analyst expectations.
The 2019 guidance comes in the wake of a 60-per-cent stock dive over the past five months and restructuring plans that will see 5,000 staff, including 3,000 in Canada, lose their jobs within five years.
The Montreal-based firm, which reports in U.S. dollars, forecasts total revenues of about $18 billion next year, as the freshly certified Global 7500 — its longest-range business jet — enters into service. The jetliner, sold out through 2021, will contribute to an expected $6.25 billion in business aircraft revenues. Both figures align roughly with analyst expectations, according to Thomson Reuters Eikon.
“Three years into our turnaround plan and Bombardier is a much stronger company,” CEO Alain Bellemare said in a news release before meeting with analysts in New York. “We are confident in achieving our 2020 objectives and see tremendous opportunities beyond 2020. As we continue to execute our turnaround plan, we are building a company with great products, strong backlogs and an efficient cost structure, capable of delivering superior financial performance well into the future.”
A $34-billion rail backlog will furnish more than 80 per cent of the railway division’s projected income of $9.5 billion for 2019.
Bombardier expects strong overall margins fuelled by healthy contributions of 7.5 to nine per cent from transportation, aerostructures and business aircraft will result in a 30-per-cent rise in total adjusted earnings before interest, tax and special items (EBIT) to between $1.15 billion and $1.25 billion. Bombardier estimates aftermarket revenues will grow to about $4 billion in 2019 from about $3.5 billion in 2018 as repairs and other services play out across its base of more than 100,000 rail cars, 4,700 business jets and 1,250 regional jets.
It also anticipates ending 2019 with more than $3 billion in cash and more than $4 billion with available credit.
Bombardier reaffirmed its guidance for 2020, which calls for more than $20-billion revenues and EBIT above $1.6 billion. Free cash flow should range between $750 million and $1 billion.
Analysts said the guidance was at best slightly positive. “We believe meeting these objectives will be key for the company to successfully complete its turnaround,” Benoit Poirier of Desjardins Capital Markets wrote in a report.
Walter Spracklin of RBC Capital Markets said the outlook will provide comfort around free cash flow but have a neutral impact on its share price. “The key focus at Investor Day however will be on the free cash flow shortfall that occurred in 2018 and achieving a better understanding on why it occurred and the risk that another shortfall may occur going forward,” he wrote.