Canada’s Bombardier posts quarterly loss

Lowers forecast for 2019

TORONTO, Aug 5, (RTRS): Bombardier Inc lowered its full-year earnings and cash flow forecasts and reported a quarterly loss , as it faces challenges in its important rail division, sending shares of the Canadian train and plane maker down 18%.

Montreal-based Bombardier is in the middle of a broader restructuring, shedding underperforming commercial plane programs to focus on its more profitable business jet and rail units. The company faced a cash crunch in 2015 after investing heavily to bring two new planes to market.

Bombardier is still wrestling with a handful of costly rail projects in its estimated $34 billion backlog of orders.

Bombardier said it would invest an additional $250 million to $300 million this year in rail, its largest division, to help resolve delayed contracts in Britain, Germany and Switzerland, while protecting against other “potential vulnerabilities” in the backlog, Chief Financial Officer John Di Bert told analysts.

“We see 2019 as a pivotal year for transportation,” he said.

Some deliveries for the Swiss Federal Railways contract could risk slipping into 2020, despite progress on the contract, the CFO said.

Bombardier Chief Executive Officer Alain Bellemare told analysts that the company’s largest growth program, the new Global 7500 business jet, is progressing well.

The company lowered its fullyear forecast for adjusted earnings before interest, taxes, depreciation and amortization (EBITDA) to $1.20 billion to $1.30 billion, from its prior view of $1.50 billion to $1.65 billion.

The free cash flow outlook for the year was lowered to negative $500 million from a range of break even to negative $250 million.