Boeing Profit Down, Outlook Up
Boeing Co.’s second-quarter results breezed past Wall Street’s earnings expectations Wednesday and the aerospace company boosted its profit outlook, predicting continued strong demand for its commercial airplanes.
Profit in the quarter fell 7%, mostly from a charge related to the sale of commercial airplane facilities in Kansas and Oklahoma, and because earnings from a year earlier were boosted by a tax refund.
But Boeing said better productivity helped raise operating profit at its defense unit and its commercial airplane business, which has seen a surge in orders as spending on aircraft grows worldwide, particularly from low-cost and overseas carriers.
“The bottom line is that the operating engine of our company is getting stronger,” said Boeing Chief Executive W. James McNerney, conducting his first earnings conference call since his appointment June 30.
The Chicago-based company’s shares rose after it raised its earnings outlook for the year, citing stronger operating margins in both businesses. But it warned of weaker revenue growth from military products because of an expected slowdown in U.S. spending on missile defense and other advanced systems.
“The one risk area ahead is a plateauing of the defense market, coupled with program risk,” said Richard Aboulafia, an analyst at Teal Group. “But everything else looks really good.”
Boeing said it earned $566 million, or 70 cents a share, for the quarter, down from $607 million, or 75 cents a share, a year earlier. The results easily surpassed the average estimate of analysts polled by Thomson First Call of 61 cents a share.
Net earnings fell in part because of a 23-cent-a-share benefit from a tax refund in the same period a year earlier. The $900-million sale of the commercial airplane facilities resulted in a charge of 9 cents.
Boeing raised its financial outlook for 2005 from a range of $2.40 to $2.60 a share to $2.75 to $2.85 a share. Analysts’ average full-year profit estimate is $2.58 a share.
Shares of Boeing rose 35 cents to $66.70 on Wednesday, after eclipsing the 52-week high of $67.95 earlier in the day.
