Boeing Profit Jumps Sharply, Spurred by Gains in Jetliner Unit
Boeing Co. said Friday its first-quarter profit more than doubled, easily beating Wall Street forecasts, as cost-cutting measures helped the aerospace firm’s core commercial jet unit pump out a much larger-than-expected operating profit.
Boeing, the world’s largest aircraft manufacturer, said earnings grew to $762 million, or 89 cents a share, from $359 million, or 41 cents a share, in the year-ago period, when a 40-day engineers’ strike slashed jetliner deliveries. Revenue rose 34% to $13.3 billion.
Analysts on average were expecting profit of 80 cents at Boeing, according to First Call/Thomson Financial.
Boeing has scoured its business in recent years, primarily commercial airplanes, to root out inefficiency and boost profits, publicly pledging to end a costly price war with rival jet maker Airbus Industrie.
Seattle-based Boeing said its operating margin, or profit less certain expenses divided by revenue, stood at 9.2% in the first quarter, ahead of its full-year 2001 goal of 8.5% and near its long-term goal of double-digit margins.
The commercial airplane unit’s operating profit soared to $860 million from $259 million on a 63% jump in revenue to $8.4 billion, which helped counter lower results in other businesses. The results were nearly $100 million more than expected, said Chris Mecray, an analyst at Deutsche Banc Alex. Brown.
The unit’s deliveries jumped to 122 from 75 a year earlier, when the engineers’ strike all but halted production.
Even excluding the strike, analysts said they were impressed with the turnaround in the jetliner business. The unit’s profit margin rose to 10.2% from 9.7% a year ago.
Profit in the military-aircraft division fell 16% to $246 million because of a decline in deliveries of F-15, F/A-18 and C-17 aircraft. At the space and communications division, operating profit edged down less than 1% to $123 million.
Despite a wave of weak earnings reports from airline customers this quarter, Boeing executives see high airplane load factors and heavy passenger traffic underpinning aircraft demand going forward.
Shares of Boeing rose $1.07 to close at $61.70 on the New York Stock Exchange.
At a Glance
Other earnings, excluding one-time gains or charges unless noted, include:
* Honeywell International Inc. said it will cut 6,500 jobs, or 5% of its work force, as it reported a steeper-than-expected 18% decline in first-quarter earnings. The company, which is being acquired by General Electric Co., said profit was down at all four of its main businesses, pulling overall profit down to $415 million, or 51 cents a share. Analysts on average had estimated earnings at 58 cents. Revenue fell 1.7% to $5.94 billion.
* Mobile phone giant Nokia upstaged archrival Ericsson, posting steady first-quarter earnings and saying it could still make good returns despite weaker markets. Nokia made a $1.27-billion pretax profit and kept its 25% to 35% sales growth target for next year, despite uncertainty as the industry shifts to costly high-speed third-generation mobile phone systems. Ericsson announced a first-quarter loss of $487.2 million and plans to cut an additional 12,000 jobs, raising the total announced so far this year to 22,000--more than 20% of its work force.
* Merck & Co.’s first-quarter profit rose 11% to $1.66 billion, or 71 cents a share, matching forecasts, helped by new business for its Merck-Medco prescription management unit. Revenue rose 28% to $11.35 billion. Sales of the Vioxx painkiller rose 31% to $485 million, less than the quarterly average Merck needs to meet its forecast for the year. Sales of the Zocor cholesterol drug also rose 31%, overtaking rival Lipitor.
* Silicon Graphics Inc.’s loss from operations widened to $47 million, or 18 cents a share, from $16 million, or 9 cents, a year ago, as revenue fell 9.6% to $509.7 million. The maker of computer workstations also said it will fire 1,000 employees, or about 15% of its work force, to help it break even in the year ending June 2002. Analysts had expected a loss of 25 cents.
* Auto parts supplier Visteon Corp. said its first-quarter profit plunged 79% to $31 million, or 24 cents a share, but beat analysts’ consensus forecast of 17 cents. Visteon said earlier this month that it expected earnings of 15 cents to 23 cents for the quarter because of the slowdown in auto production, and it announced plans to slash 1,800 jobs. Sales fell 10% to $4.72 billion.
* Washington Post Co. said first-quarter profit fell 60% to $9.55 million, or 95 cents a share, as advertising sales in its newspaper and television operations declined and expenses rose. Revenue was up 7.4% to $587 million.
