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Boeing 4th-quarter net doubles

Boeing's quarterly earnings more than doubled, easily topping expectations, on improving margins in its commercial jet.

india Updated: Feb 02, 2006 12:14 IST

Boeing Co on Wednesday reported that quarterly earnings more than doubled, easily topping expectations, on improving margins in its commercial jet and weapons units, and raised its profit outlook for 2006.

The fourth-quarter results and rosy forecast dispelled concerns the No 1 US aerospace company would lose momentum after commercial jet orders set a record last year.

"This is sort of an ongoing dialogue, but for the moment investors are pleased with these numbers, given where their head was," said Cai Von Rumohr, an analyst at SG Cowen. "Profits were good, cash was great, and the guidance was good."

The stock, which surged in 2005, was up 4.5 per cent in midday trade on Wednesday and accounted for more than half of the Dow Jones Industrial Average's broader rise.

Boeing said fourth-quarter profit rose to $460 million, or 58 cents a share, from $186 million, or 23 cents a share, a year earlier.

Excluding exceptional items, it earned 74 cents a share, beating Wall Street analysts' expectations of 44 cents, according to Reuters Estimates.

Boeing stock, which rose 36 per cent last year, has lost momentum early in 2006, up just 2 per cent so far this year, even as the Amex Defense Index has gained 5.5 per cent.

Revenue rose 7 per cent to $14.2 billion, but was shy of analysts' estimates of $14.7 billion. Boeing said that strikes at its commercial aircraft and rocket launch businesses reduced full-year 2005 revenue by about $2.3 billion.


Looking ahead, Boeing raised its forecast for 2006 earnings per share to between $3.25 and $3.45 from the previous forecast of $3.10 to $3.30.

But Boeing reduced its full-year 2006 revenue outlook to $60 billion on what it said was a previously disclosed accounting change in its commercial airplane business.

Divulging its 2007 outlook for the first time, Boeing said it sees earnings increasing to between $4.10 and $4.30 a share on revenue of $63.5 billion to $64.5 billion.

The Chicago-based company kept unchanged its forecast for commercial jet deliveries in 2006 at 395, up from 290 last year. For 2007, it forecast deliveries would rise to between 440 and 445 planes.

The company benefited in 2005 on demand from fast-growing airlines in Asia and the Middle East, especially with its new fuel-efficient 787 Dreamliner and workhorse 737 planes.

Boeing Chief Executive James McNerney acknowledged in a conference call that orders are likely to slow this year from last year's record pace, but still predicted "a pretty good order flow."

Boeing said commercial jet revenues rose 8 per cent to $5.9 billion, with the operating margin improving to 5.6 per cent from a negative 2.8 per cent in the year-earlier quarter.

Boeing, the No 2 Pentagon contractor, reported that defense revenues rose 7 per cent to $8.1 billion, with operating margins improving to 11.4 per cent from 8.9 per cent a year earlier. It makes missile defense systems and military aircraft like the F-18, F-15 and the Apache helicopter.

McNerney said Boeing expects defense growth "to moderate due to a tightening budget environment" but predicted margins would stay strong.

Cash and investments in marketable securities rose to $8.4 billion at year's end from $7.5 billion at the end of the third quarter, even after Boeing spent $832 million buying back shares in the quarter.

Chief Financial Officer James Bell said Boeing still has 24 million shares to buy back under its current authorization and expected it to get another one once it has expired.

Boeing shares were up $3.07 to $71.38 on the New York Stock Exchange.

First Published: Feb 02, 2006 12:14 IST