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Boeing profit jumps despite slow sales; boosts delivery forecast
[NEW YORK] Boeing Co on Wednesday beat profit expectations in the third quarter despite declining revenue, a sign that cost-cutting is having an impact at the world's biggest planemaker.
Boeing also notched up its sales forecast for the year, saying it would deliver more jetliners than originally planned.
Factoring out a tax benefit, the results showed the effect of Boeing's lean manufacturing drive as it tries to boost profit margins and compete for orders against European rival Airbus amid slowing jetliner sales.
"Solid operating performance across our commercial and defense and space businesses in the third quarter again generated strong cash flow for Boeing," chief executive officer Dennis Muilenburg said.
Operating cash flow rose 12 per cent to US$3.2 billion and Boeing affirmed its target of US$10 billion or more this year.
Analysts said the cash would reassure investors, but added that the stock has limited upside after a recent rally. "Sentiment and positioning (in the stock) do not appear particularly negative and we do not believe the stock is set up to run away," JP Morgan analyst Seth Seifman wrote in a note.
Boeing shares fell as much as 1.7 per cent to US$136.72 but later eased to US$138.74 on the New York Stock Exchange.
Jetliner deliveries were down nearly 3 per cent from a year ago, reflecting fewer profitable 777 and 737 models reaching customers. But Boeing raised its target for jetliner deliveries for the year to between 745 and 750, from 740 to 745.
The additional planes will boost revenue by US$500 million, and Boeing raised its year-end revenue target to between US$93.5 billion and US$95.5 billion.
The closely watched deferred production cost balance for Boeing's 787 Dreamliner, a tally of manufacturing costs not yet recouped by sales, declined about US$150 million in the quarter to US$27.5 billion, reflecting the fact that the high-tech plane is now profitable by some accounting measures. The balance peaked at US$28.7 billion in the first quarter and has since declined.
Boeing is curbing the use of paid overtime by 80,000 salaried workers based in the United States.
Revenue and profit fell in Boeing's defense business, partly an effect of the discontinued C-17 transport plane.
Boeing's adjusted earnings, which exclude some pension and other costs, rose 39 per cent to US$3.51 per share, including a tax gain of 70 cents a share it received by claiming more depreciation than it had previously.
Factoring that out, core earnings were US$2.81 a share, compared with the US$2.62 analysts expected, according to Thomson Reuters I/B/E/S.
Revenue fell to US$23.90 billion from US$25.85 billion.