BOEING ANNOUNCES EXCELLENT PROFITS AND CONSOLIDATES DEFENCE DIVISION
01 Feb 06. AP reported on Wednesday that Boeing’s fourth-quarter earnings more than doubled as the huge aerospace company’s resurgent commercial airplane division posted strong gains. The company also raised its profit outlook for 2006, citing better operating performance.
Its shares rose $3.23, or 4.7 percent, to $71.54 in premarket trading, approaching the high end of its 52-week range of $50.07 to $72.40. Boeing’s fourth-quarter net income rose to $460m, or 58 cents per share, up from $186m, or 23 cents per share a year earlier. Analysts were expecting 44 cents a share, based on the consensus estimate by Thomson Financial.
The year-ago profit was depressed by heavy charges for ending production of its 717 jet and writing off its loss of a controversial Pentagon contract.
Boeing said fourth-quarter revenue grew 7 percent to $14.2bn, up from $13.3bn a year earlier but below Wall Street estimates of $14.8bn.
Boeing’s Seattle-based commercial airplane division had operating earnings of $330m, (2004:($149m).
Boeing Chairman and CEO Jim McNerney said in a statement that Boeing will focus on several new growth and productivity initiatives to further boost performance.
“Our results and improved outlook reflect a strong commitment to growth, expanding margins and improving how we do business every day,” McNerney said.
For the full year, Boeing’s net profits grew 37 percent to $2.6bn, capping a year in which it closed the gap on Airbus for the world’s top spot in commercial aviation despite a four-week strike at its production facilities. Boeing’s earnings amounted to $3.20 a share in 2005 versus $1.87bn, or $2.30 a share, a year ago. The strike shaved off $2.3 bn in annual revenue, which still grew 4.3 percent, (2004: $54.8bn).
Boeing said the commercial airplane outlook is “very strong” and reiterated its expectation to deliver 395 planes in 2006. Toulouse, France-based Airbus SAS said earlier this month it unexpectedly beat Boeing’s tally for jet orders last year. But Boeing surpassed Airbus in value terms after winning 70 percent of global orders for larger, pricier planes, led by its fuel-efficient 787 Dreamliner.
Revenue from Boeing’s defense unit grew 7 percent to $8.1bn. The company said its C-17 transport plane led an 18 percent increase in sales of aircraft and weapon systems, which totaled $3.1bn. Operating profits from defense rose 37 percent to $924m. Boeing increased its 2006 earnings per share forecast to between $3.25 and $3.45, up from $3.10 to $3.30, citing better operating performance and a lower-than-expected tax charge in the first quarter. The company cut its 2006 revenue outlook from $62bn to $60bn because of an accounting change. It also issued a 2007 profit forecast of $4.10 to $4.30 per share, in line with analysts’ estimates of $4.15.
On January 27th, Jim Albaugh, President and CEO of Boeing Integrated Defense Systems (IDS), announced a significant restructuring of that unit in order to enhance customer focus and improve productivity.
“Since the creation of Boeing IDS more than three-and-a-half years ago, our team has enjoyed considerable success in growing our business by focusing on the enduring needs of our customers and providing innovative solutions,” Albaugh said.
“The bold steps we’re taking today will enable us to more effectively address future and evolving requirements for integrated, capability-driven solutions at reduced costs across the markets we serve. The announced organization will continue our customer focus, improve our ability to execute and position Boeing for sustainable, long-term growth and profitability in a changing market environment.”
Over the next few weeks, operations will be consolidated into three business profit and loss centers organized around capabilities.
John Lockard is named President, Precision Engagement and