Bombardier annual revenue falls by $1.8B
Demand sluggish for private jets and subway cars in Europe, Asia
MONTREAL — Bombardier Inc. says it had a $981-million (U.S.) net loss last year, a wider-than-expected loss for the fourth quarter as sales fell in the company’s biggest divisions: business jets and trains.
But that was an improvement over 2015, when the Montreal-based company’s full-year loss was more than five times higher at $5.34 billion.
Its full-year revenue fell by $1.8 billion from 2015 to $16.34 billion last year.
Bombardier Aerospace, which is the world’s third-biggest aircraft manufacturer, has been struggling to launch its new generation of commercial jets — the CSeries — after more than a decade of preparations.
And unlike a year ago, when the Montreal-based manufacturer disclosed a significant order for its new C Series jetliner, Thursday’s statement was bereft of any surprise sales announcements.
“Although the lack of orders has no impact on the financial results, we believe it could be seen as a disappointment,” Benoit Poirier, an analyst at Desjardins Capital Markets, said in a note to clients.
Sluggish demand for private jets and the end of major subway projects in Europe and Asia are weighing on Bombardier, as CEO Alain Bellemare steps up efforts to reshape the company after shares fell to a 26-year low in 2016.
He announced about 14,500 job cuts last year to overcome cost overruns and a delay of more than two years in developing the C Series, a competitor to single-aisle planes from Boeing Co. and Airbus Group.
Meanwhile, the Bombardier Transportation mass transit division has been embroiled in a highly public dispute over a contract for a new Eglinton rail line being constructed through midtown Toronto.
The company is also the focus of a recently filed complaint at the World Trade Organization, after Brazil and its largest aircraft manufacturer accused the Canadian and Quebec governments of providing unfair financial assistance to Bombardier.
However, the company is “actively engaged” with many customers over potential C Series orders, Bellemare said on a conference call with analysts.
“Nothing has changed. If there’s anything, we’re just more confident than we were a year ago.”
Free cash flow reached $496 million in the fourth quarter, easily exceeding the $270 million average of analysts’ estimates for the closely watched figure. That indicated that the company is “building credibility,” Walter Spracklin, an analyst at RBC Capital Markets, said in a note to clients.
“Cost-transformation initiatives are taking hold, and we believe investor confidence will continue to improve as this management team executes and delivers on its targets,” he said.
Bombardier reaffirmed its forecast that 2017 revenue will stem two years of declines, increasing by a lowsingle-digit percentage.
Fourth-quarter sales tumbled 13 per cent to $4.38 billion, while analysts had anticipated $4.63 billion.
The company is ramping up output of the C Series after spending about $6 billion to develop the aircraft. The plane entered service in July and will probably contribute to losses for the first two years of production.
Bellemare reaffirmed the goal of delivering 30 to 35 C Series jets this year — part of the 80 to 85 commercial aircraft that the company plans to ship.
The manufacturer also plans to deliver about 135 business aircraft in 2017, short of last year’s tally of 163. Business jets typically have been the company’s most profitable products. With files from The Canadian Press