Boe­ing tops first-quar­ter profit fore­casts, air­plane de­liv­er­ies rise

The China Post - - WORLD BUSINESS - BY DAVID KOENIG

Boe­ing Co. de­liv­ered more com­mer­cial air­lin­ers in the first quar­ter, off­set­ting slug­gish re­sults in the de­fense side of its busi­ness and push­ing its firstquar­ter earn­ings up 38 per­cent.

The profit topped Wall Street ex­pec­ta­tions, but rev­enue was be­low fore­casts, and pro­duc­tion costs of the Boe­ing 787 jet con­tin­ued to pile up.

Boe­ing and Euro­pean ri­val Air­bus Group N.V. are ben­e­fit­ing as air­lines use some of their record prof­its to buy new and more fuel-ef­fi­cient jets. Boe­ing ex­ec­u­tives pre­dict that in­creased travel, new routes and air­line growth will bol­ster plane sales for years to come. They brush aside con­cern that fall­ing oil prices could un­der­cut de­mand or cause air­lines to de­lay pur­chases.

“Th­ese re­main very good times for our in­dus­try,” CEO Jim McNer­ney told an­a­lysts on a con­fer­ence call. He said de­mand for planes is tightly re­lated to air­line prof­its, and lower oil prices since last sum­mer have not changed the air­lines’ plans to up­grade their fleets.

Boe­ing de­liv­ered 184 air­lin­ers in the quar­ter, up from 161 in the same pe­riod last year, with two-thirds of them for the ven­er­a­ble 737 jet, a work­horse on short and mid-range routes around the world.

Mean­while, or­ders mi­nus can­cel­la­tions rose by a net of 110 in the quar­ter, and Boe­ing now has 5,700 or­ders on its books. About half are for an up­com­ing ver­sion of the 737. The back­log is val­ued at US$495 bil­lion.

Boe­ing is still los­ing money on its in­no­va­tive 787 pas­sen­ger jet, made with a large share of light­weight car­bon com­pos­ites to save fuel. So-called de­ferred pro­duc­tion costs rose an­other US$793 mil­lion, boost­ing the ac­cu­mu­lated to­tal to nearly US$27 bil­lion. The com­pany hopes to begin turn­ing a profit on the plane soon, and the rate of losses slowed from both a year ago and last year’s fourth quar­ter.

Cowen and Co. an­a­lyst Cai von Ru­mohr called the 787-cost trend “very en­cour­ag­ing,” and Jef­feries an­a­lyst Howard Rubel said the com­pany “is start­ing to show good im­prove­ment in its pro­duc- tion costs.”

The Chicago- based com­pany said that net in­come rose to US$1.34 bil­lion, or US$1.87 per share. Ex­clud­ing US$113 mil­lion in pen­sion ex­penses, the com­pany said ad­justed profit was US$1.97 per share — beat­ing the US$1.81 per share fore­cast by an­a­lysts sur­veyed by Zacks In­vest­ment Re­search. A year ear­lier, ad­justed profit was US$1.76 per share.

Rev­enue rose 8 per­cent to US$22.15 bil­lion. That was short of the US$22.63 bil­lion ex­pected by six an­a­lysts sur­veyed by Zacks.

The com­pany reaf­firmed its fore­cast for full-year earn­ings in the range of US$8.20 to US$8.40 per share and rev­enue be­tween US$94.5 bil­lion and US$96.5 bil­lion.

AP

This Feb. 11, 2013 file photo shows a Boe­ing 787 jet taxi­ing fol­low­ing a test flight, at Boe­ing Field in Seat­tle.

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