Boeing doubles profit in quarter
Boeing Co. shares soared Wednesday after the company reported that fourth-quarter profit more than doubled and raised its earnings outlook for the next two years.
With a surge in commercial aircraft orders, the world’s largest aerospace manufacturer said quarterly earnings climbed to $989 million, or $1.29 a share, from $460 million, or 58 cents, a year earlier. Revenue jumped 26% to $17.5 billion.
The results exceeded analysts’ forecasts of per-share profit of 98 cents. That propelled Boeing shares up $3.56, or 4.1%, to $89.56, on volume that was more than three times normal.
“It’s just an amazing performance,” said Paul H. Nisbet, an aerospace analyst at JSA Research Inc. in Newport, R.I.
Predicting little letdown in aircraft orders, Boeing said it was raising its earnings forecast. The Chicago-based company expects 2007 per-share earnings to be about 10 cents higher, in a range of $4.55 to $4.75. Net income is expected to rise to $5.55 to $5.75 a share in 2008.
For all of 2006, Boeing earned $2.22 billion, or $2.85 a share, compared with $2.57 billion, or $3.20, in 2005. Revenue rose 15% last year to $61.5 billion.
The company’s full-year results included a third-quarter charge of $615 million to settle a three-year federal probe into two high-profile Pentagon contracting scandals. Boeing also took a $320-million charge to shut Connexion, its in-flight Internet service business.
“We made great progress in 2006, which has given us a solid foundation for even better performance in 2007 and beyond,” Boeing Chairman and Chief Executive James McNerney said during a conference call with analysts.
The value of orders yet to be completed reached $250 billion, or enough backlog of work to sustain current earnings for several years without additional sales, the company said.
Boeing is the largest private employer in Southern California, with about 31,000 workers, most of them on defense-related projects.
The company has two major lines of business: commercial aircraft manufacturing, most of which is based in the Seattle area, and military weapons development and production.
Sustained Pentagon spending bolstered Boeing’s defense business, which saw fourth-quarter revenue climb 18% to $9.7 billion. The gains were fueled by deliveries of F-15 fighter jets and Chinook helicopters and increased work on upgrading AC-130 gunships and KC-10 tankers for the Air Force. Operating profit increased 10% to $1.03 billion.
With a record number of airliner orders, Boeing reported that commercial aircraft revenue climbed 37% to $7.6 billion in the fourth quarter; operating profit doubled to $665 million.
Boeing posted 1,044 aircraft orders last year, beating European archrival Airbus, which sold 713 airplanes, for the first time in six years.
McNerney said Boeing’s 787 Dreamliner jet, the company’s first new aircraft in a decade, remained on schedule despite revelations of development challenges facing some of its suppliers.
Investors and airlines are keeping a close eye on Boeing’s performance with the 787, mindful of the two-year delay on Airbus’ A380 super-jumbo jet program, which has been financially disastrous for the manufacturer and its corporate parent.
“We expect to deliver the 787 on time, with first delivery in May 2008,” McNerney said.
He said he expected commercial aircraft orders to remain robust as U.S. carriers begin ordering planes again after a six-year lull in the wake of the 9/11 terrorist attacks. Most orders in recent years have come from international airlines, particularly those based in Asia and the Middle East.
On the defense front, McNerney said spending for new weapons was likely to moderate as the wars in Iraq and Afghanistan drained federal resources.
“We don’t see a big kicker for us or anyone else over the next few years,” he said.
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