Boeing slashes full-year forecast for defence unit

bengaluru — Boeing reported a better-than-expected profit on Wednesday, but cut its full-year forecast for margins in its defence business, citing higher costs in the KC-46 aerial refuelling tanker programme.

Shares of the world’s biggest planemaker fell 3.3 per cent premarket after it forecast a 2018 operating margin of 10 per cent to 10.5 per cent in its defence business, down from its previous outlook of 11 per cent. Boeing sees 2018 core earnings of $14.30 to $14.50 per share, unchanged from the same period last year, but below the Wall Street estimate of $14.56 per share. Core earnings exclude some pension and other costs. The Chicago-based company raised it full-year revenue forecast, but kept its earnings per share and cash flow forecasts unchanged.

Operating margins in its defence, space and security unit fell to 9.3 per cent in the quarter from 11.9 per cent a year earlier, reflecting increased costs of $111 million in the KC-46 Tanker, Boeing said.

The KC-46, an US Air Force aerial refuelling programme, has troubled Boeing for years as it struggled to get airworthiness certifications and complete flight tests. After delays last year Boeing was forced to take a $329 million charge for the programme. Last month, the Air Force said the first delivery of the KC-46 would be in October.

Second-quarter core earnings came to $3.33 per share in the quarter, beating the average analyst estimate of $3.26 per share, according to Thomson Reuters.

Overall revenue rose 5 per cent to $24.26 billion, also beating estimates, while commercial aircraft deliveries rose 6 per cent to 194 aircraft. Boeing booked 239 net orders during the quarter, including 91 wide-body jets.

For the full year, the company expects total revenue of $97 billion to $99 billion, compared with its previous estimate of $96 billion to $98 billion.