Bombardier optimistic
‘WE’RE AT A TURNING POINT’ CEO tells investors as 4th-quarter results are released
There’s plenty of opportunity for growth ahead at Bombardier Inc., says CEO Pierre Beaudoin, who urged investors Thursday to keep the plane and train maker’s weakerthan-expected fourth-quarter results — and prospects for 2013 that aren’t much rosier — in perspective.
Shares in Bombardier fell by more than nine per cent in trading after the Montreal manufacturer reported a profit of 10 cents a share for the fourth quarter, below an analyst consensus estimate of 12 cents a share, says Bloomberg.
But Beaudoin said investors should look past the challenges in 2013 and view last year as a “turning point” for the company — and several analysts agreed.
“The results in 2012 are not reflective of our potential as we faced some execution issues,” Beaudoin said on a conference call.
“After proving our resilience through the economic crisis, today we are now at a turning point with our impressive total order book of close to $67 billion, we are forging ahead with breakthrough products and expanding our reach in pivotal growth markets,” he said.
There are several challenges ahead for Bombardier in 2013, not the least of which will be successfully getting its new CSeries in the air by mid-year and completing the restructuring currently underway in its rail division, including roughly 1,200 layoffs across its operations and the closure of a plant in Germany.
But Bombardier’s management said the CSeries remains on track for first flight by the end of June, and that the company will unveil the first flight test vehicle on March 7 at a ceremony at its plant in Mirabel.
Management said most of the primary structures are now assembled on the first plane, including its wings, stabilizers, and most recently, its Pratt & Whitney engine. Beaudoin said the assembly of three more test flight vehicles has also begun.
Management acknowledged the cost of getting the new aircraft into service would drag on its earnings until at least the end of 2015, and not contribute to the bottom line until sometime thereafter due to the costs associated with ramping up its production and the discounts given to the aircraft’s initial customers.
The company also acknowledged Thursday, due to some technical issues, its new LearJet 85 would enter service six months later than expected, in mid-year 2014.
Its rail division, which is meant to offset to the cyclical nature of the aerospace cycle, has been straddled with its own issues, including some execution troubles and the timing of the delivery of some of its orders impacting its earnings.
As a result, the rail division is in them midst of a restructuring that will include the closure of a plant in Germany, and the reduction in its staff by about 1,200 employees, including a few hundred from the discontinued plant in Germany.
Beaudoin said the issues with reduced revenue from China had been normalized as its new contracts there came into effect.
Cumulatively, however, all this took its toll in the fourth quarter, and will likely trickle into 2013, Bombardier’s management said.