Boeing Co. reported a better-than-expected fourth-quarter profit Wednesday as booming sales of passenger planes more than offset a slip in earnings on military contracts and overshadowed lingering worries over delays with the 787, its newest jetliner.
This month, Chicago-based Boeing surprised Wall Street by announcing that because of production problems airlines won’t get the first 787 Dreamliner until early next year, or nine months behind schedule. Boeing has taken orders for nearly 860 Dreamliners, making the highly fuel-efficient, 250-passenger plane the hottest-selling aircraft ever.
“It was a strong quarter” despite the setback with the 787, said Paul H. Nisbet, analyst with JSA Research, adding that the 520 aircraft orders Boeing received in the fourth quarter “are just unheard-of numbers.”
The world’s largest aerospace company said net income rose 4% to $1.03 billion, or $1.36 a share, beating analysts’ expectations by about 4 cents. In the year-earlier period, Boeing had earnings of $989 million, or $1.29 a share. Sales were flat at $17.47 billion.
Shares of Boeing, which had plunged 20% in recent months because of 787 program glitches, recovered Wednesday, rising $1.91 to $82.87.
As a result, revenue from the commercial aircraft division, which accounts for about half of the company’s overall business, climbed 17% to $8.9 billion in the fourth quarter. With cost cutting and higher production rates Boeing said its pretax operating profit jumped 48% to $973 million in the fourth quarter.
But Boeing’s defense business posted a 5% drop in pretax operating earnings to $978 million as revenue fell 14% to $8.6 billion. Much of the decline resulted from its rocket-making business becoming a joint venture with Lockheed Martin Corp. The rocket operation generated about $1 billion in revenue in the year-earlier period.
Despite prospects for a slowdown in defense spending, Boeing’s defense business is likely to remain strong as it vies for major Pentagon contracts such as aerial refueling tankers for the Air Force and more foreign sales, said James Albaugh, president of Boeing’s Integrated Defense Systems.
“I’ve never seen a better time in the international market than now,” he said in a telephone interview Wednesday.
Boeing is the largest private employer in Southern California with about 31,000 workers, most of them in defense-related programs.
For the year, Boeing posted a profit of $4.1 billion, up 84% from $2.2 billion in 2006. Revenue rose 8% to $66.4 billion from $61.5 billion.