Boeing Profit Up 30% for Quarter
Boeing Co. on Wednesday reported a 30% increase in third-quarter profit, beating Wall Street forecasts, as the aerospace giant squeezed more cash out of its businesses even as revenue shrank.
The world’s biggest plane maker said it earned $622 million, or 72 cents a share, in the quarter ended Sept. 30, up from $477 million, or 56 cents, a year ago. Revenue declined 10.5% to $11.88 billion.
Analysts on average had expected a strong quarter from Boeing amid surprisingly strong commercial jet orders and rising cash-flow projections. The consensus earnings forecast among analysts surveyed by First Call/Thomson Financial was 67 cents.
“This high-performance quarter underscores the remarkable transformation of our company and, in particular, the outstanding turnaround of our commercial airplane business,” Boeing Chairman and Chief Executive Phil Condit said.
In its core commercial airplane unit, operating earnings rose 38% to $739 million, although revenue fell 13% to $7.5 billion.
The decline in sales had been expected as jetliner deliveries have decreased to about 490 this year from a peak of 620 in 1999. Boeing doesn’t get the bulk of payments until it delivers each plane.
With 467 new commercial jet orders booked through the first nine months of 2000, Boeing is well ahead of 1999, when it announced 391 for the year. New orders have boosted Boeing’s backlog and should hold firm through next year, Condit said.
“I believe that the fundamental order strength remains, so I would expect to keep going at a similar kind of rate,” Condit said on a teleconference, adding: “It is not unreasonable that we would be at least stable next year.”
Solid orders should help Boeing keep production at current levels, with modest increases over time, but nothing like 1999’s record 620 deliveries, Condit said.
Boeing in 1999 earned a relatively meager $2.3 billion on sales of $58 billion after suffering big losses in 1997 and early 1998 as it struggled to crank out enough planes to meet demand.
Asked specifically when Boeing might return to record production, Condit replied: “My hope is that we won’t see that very soon.”
Condit said he expects to launch a larger version of the 416-seat 747-400 jumbo jet in the first quarter of 2001, though the company has yet to book any orders for it and will not proceed with a 520-seat 747X family without strong demand.
Boeing predicted revenue of $57 billion in 2001, an increase from the current 2000 projection of $51 billion, but still below 1999.
Boeing affirmed its estimate for overall full-year 2000 operating margins, or profit before taxes divided by revenue, of 7% and boosted its 2001 margin estimate to 8.5% from 8%.
Boeing in the last two years has slashed its work force by about 50,000 from a peak of 238,600, sold off assets and tightened its production processes to boost profits.
Boeing shares rose 25 cents to close at $60.75 on the New York Stock Exchange.
At a Glance
Other earnings, excluding one-time gains or charges unless noted, include:
AIRLINES:
* AMR Corp., parent of American Airlines, said third-quarter profit rose 51% to $322 million, or $1.96 a share, well beyond the $1.78 analysts were expecting, as revenue grew 12% to $5.26 billion. The company benefited from higher fares and problems that forced rival United Airlines to cancel thousands of flights because of labor, weather and air-traffic control problems. Higher average fares and more passengers combined to more than offset increased fuel costs, AMR said.
* America West Holdings Corp., parent of America West Airlines, reported a third-quarter loss from operations of $4.1 million, or 11 cents a share, contrasted with analyst expectations of a 15-cents-a-share profit, as the carrier struggled with flight delays and cancellations and higher fuel prices. The company had earned $22.2 million, or 57 cents, in the year-earlier quarter. Revenue rose 6.8% to $590.5 million.
FINANCIAL SERVICES:
* Chase Manhattan Corp.’s third-quarter earnings fell 24% to $905 million, or 68 cents a share, well below the 93 cents analysts expected. Results on the nation’s third-largest bank holding company were hurt by venture capital investments amid the decline in technology-related stocks last month. Trading revenue and corporate finance fees also fell. Excluding the venture capital business, Chase said it would have had profit from operations of $1.02 billion, about flat from a year earlier. Chase lost $25 million in investments in start-up companies, compared with a gain of $377 million a year earlier.
* J.P. Morgan & Co., which agreed last month to be acquired by Chase, said net income rose 16% to $514 million, or $2.77 a share, exceeding forecasts of $2.62. Morgan said trading revenue more than doubled to $852 million as pretax income from trading and investing with the bank’s money rose to $238 million from a loss of $31 million, and the equities unit traded more derivatives for clients.
* Wachovia Corp.’s third-quarter profit rose 3.6% to $270.2 million, or $1.32 a share, as the regional bank increased service and credit card fees. Revenue rose 9.4% to $1.16 billion.
OTHER INDUSTRIES:
* Avon Products Inc.’s earnings rose 5% to $93 million, or 39 cents a share, in the third quarter, a penny better than forecasts, on a 7% increase in revenue to $1.34 billion. Avon said sales and profit gains in the U.S., Latin America and in the Asia-Pacific region more than offset a 3% sales decline in Europe due to currency weakness.
* Cendant Corp. reported third-quarter profit of $228 million, or 29 cents a share, virtually flat with results of $229 million, or 29 cents, a year ago, and matching forecasts. Revenue edged up to $1.21 billion from $1.2 billion.
* Chiquita Brands International Inc., one of the top two U.S. banana producers, posted a third-quarter loss of $51.9 million, or 84 cents a share, including an extraordinary loss of $2 million, or 3 cents a share, from debt financing. The company cited a weak euro and higher fuel costs. In the year-ago quarter, Chiquita reported a loss of $7 million, or 62 cents.
* Immunex Corp. said third-quarter profit rose 50% to $31.5 million, or 6 cents a share, on a 44% jump in sales to $219 million. The biotechnology company was expected to earn 6 cents a share on average, with estimates ranging from 3 cents to 7 cents, according to First Call/Thomson Financial. Revenue growth was led by strong sales of rheumatoid arthritis drug Enbrel.
* Nabisco Holdings Corp. said third-quarter profit rose 33% to $108 million, or 40 cents a share, beating forecasts of 35 cents. Sales rose 10% to $2.25 billion, led by a 37% jump in sales in the division that sells condiments and snacks other than cookies and crackers. The earnings figures exclude costs related to its pending sale to Philip Morris.
* St. Jude Medical Inc., a maker of medical devices to treat cardiac disease, said third-quarter profit from operations rose 3% to $38 million, or 44 cents a share, matching estimates, on rising demand for pacemakers and other products. Sales rose 4% to $287 million.
* TRW Inc. reported a 37% slide in third-quarter earnings to $91.3 million, or 73 cents a share, due in part to a weak euro and reduced output from Ford Motor Co. linked to the Firestone tire recall. The results beat analyst forecasts of 70 cents. The maker of products ranging from air bags to space telescopes said sales fell 9% to $4.1 billion. TRW last month warned that third-quarter earnings would be 19 to 24 cents below analyst expectations of $1.05 a share because of production cutbacks at Ford, weakening foreign currency and other problems. The company said its earnings also were undermined by a change in mix of major space-related programs, softness and interruptions in automotive production schedules, and increased investments in its effort to commercialize defense technologies.
* Raytheon Co. reported profit from continuing operations of $133 million, or 39 cents a diluted share, in line with forecasts. In the year-earlier quarter, Raytheon reported a loss of $89 million, or 26 cents, including pretax restructuring charges of $464 million, or 84 cents a share. Raytheon, the maker of Patriot missiles, radar and business jets, said sales rose 2% to $4.2 billion.
* United Technologies Corp.’s third-quarter operating earnings rose 14% to $496 million, or 98 cents, 2 cents better than analysts expected. The company reported strength in all its businesses, which include Pratt & Whitney jet engines, Flight Systems, Carrier air conditioners and Otis elevators. Revenue rose 6% from $6.13 billion.
* Apparel company VF Corp. said earnings declined 3% to $100.4 million, or 86 cents a share, meeting expectations. Sales rose 8% to $1.6 billion on strong sales of its Lee and Wrangler jeans and contributions from newly acquired brands.
