Boeing Co. reported Thursday sharply higher fourth-quarter earnings, but the upswing was the product of a large write-off the prior year, and it belied continuing problems at the company's commercial aircraft and satellite businesses.
Boeing also cut its earnings forecast for 2003 and said that for the first time it expected revenue this year from defense-related work to exceed that of its commercial aircraft operations.
The aerospace giant posted fourth-quarter net income of $590 million, or 73 cents a share, compared with $100 million, or 12 cents, in the year-earlier period. But the fourth quarter of 2001 included a $622-million charge to pay for massive layoffs and other cost-cutting measures in the aftermath of the Sept. 11 terrorist attacks.
Excluding those one-time charges, Boeing's latest fourth-quarter operating profit fell 21% to $571 million, or 71 cents a share, from $722 million, or 90 cents, a year earlier.
The operating results were in line with analysts' expectations, and Boeing's shares rose 5 cents to $30.66 on the New York Stock Exchange.
Sales in the fourth quarter fell 13% to $13.7 billion from $15.7 billion as commercial jet deliveries continued to slow.
Boeing's chairman, Philip Condit, reduced once again his forecast for the company's commercial jet deliveries and raised the possibility of additional cost reductions at its already battered satellite-making operations in El Segundo.
Since the terrorist attacks, the airline industry has been reeling from a slump in air travel and has taken planes out of service and postponed orders for new ones. Last year, deliveries of Boeing jets fell 28% to 381 from 527 in 2001. Condit expects airline deliveries to drop to 280 this year; he had put the number as high as 285.
As a result, Condit now expects Boeing's earnings to fall between $1.90 and $2.10 a share in 2003, compared with analysts' consensus estimate of $2.20.
He also factored into that estimate a "relatively brief" war in Iraq.
"In my view, anything under a month would be short; anything beyond six would be long," Condit said.
For 2003, Condit expects the Chicago-based company's revenue to slip to $49 billion from its initial estimate of $50 billion. Last year, revenue dropped 7% to $54.1 billion from $58.2 billion in 2001.
Boeing posted net income of $2.32 billion in 2002, down 18% from $2.83 billion in 2001.
The downturn in the telecommunications industry also has hurt Boeing's sale of satellites and launch vehicles, which are primarily developed at its facilities in Southern California.
Condit said Boeing was looking at only a handful of satellite launches this year, compared with five last year, six in 2001 and 11 in 2000. The satellites can take up to 18 months to build and sell for $100 million to $250 million each.
Facing a severe slump in orders, Boeing's satellite business announced in the fall that it may slash as many as 1,500 jobs on top of the nearly 1,500 positions it had eliminated from its payroll in 2002. In all, the cuts would shrink the local workforce by more than a third to 5,800 from 8,800.
"Commercial space continues to be a disappointment," Condit said, adding that Boeing would continue "resizing" the business. "We'll be pretty aggressive about it for the next couple of months," he added.
The slowdown in the commercial aircraft business was partially offset in the fourth quarter by increased earnings at Boeing's military aircraft and missile systems unit, which posted operating income of $389 million, up 5% from $372 million a year earlier.
The unit's revenue in the latest quarter rose 10% to $3.79 billion from $3.45 billion.
Analysts said Boeing's controversial move to diversify into military work with its acquisition of McDonnell Douglas and Rockwell International in the 1990s appeared to be paying off.
"Earnings were just about what we expected," said Paul. H. Nisbet, aerospace analyst for JSA Research Inc.
Considering the market for commercial aircraft, "they're holding up well thanks to their defense business," Nisbet said.