Boeing profit up 58% with 137 1Q deliveries
Cost of building 787 cut by 50%; 737 MAX has 451 firm orders
The Chicago company (BA) said Wednesday that first-quarter profit soared 58 percent, beating analysts' expectations, as sales at the commercial airplane division surged. Even the defense business grew, although much more slowly.
Boeing delivered 137 commercial airplanes in the quarter, winning bragging rights over European rival Airbus, which had 131 deliveries.
Boeing's backlog rose, partly on orders for a new, more fuel-efficient version of the venerable 737 jetliner. Chairman and CEO W. James McNerney Jr. said the company was focused on profitably boosting commercial airplane production and delivery rates.
McNerney said the company remains on track to increase production on the new 787 Dreamliner to 10 aircraft monthly by the end of 2013. Boeing opened a second Dreamliner assembly line in North Charleston, S.C. That facility will roll out the first Dreamliner built there Friday.
"Charleston looks very good," McNerney said.
Boeing's CEO said he recently visited the 787 lines in both North Charleston and Everett.
"I think the learning curve progress in both places is giving me more and more confidence" that Boeing is on track both to meet delivery goals and improve profitability on the program, he said.
Boeing's chief financial officer Greg Smith said costs are coming down significantly on the 787, which Boeing was about three years late in delivering. Smith estimates a 50 percent drop in unit cost between the first 787, delivered last September to All Nippon Airways, and the 60th, which will roll out this summer.
Boeing doesn't anticipate a significant affect on 787 production or on production of other aircraft due to recent problems at supplier Spirit AeroSystems. Spirit's facility in Wichita, Kan., suffered tornado damage and was shut down for a week.
McNerney called the impact from Spirit "manageable."
Boeing also is increasing production of the updated 747-8, built in Everett. The company delivered the first 747-8 passenger plane to a VIP customer last quarter.
Germany's Lufthansa should receive the first commercial 747-8 passenger plane today “if everything goes as planned,” McNerney said.
The company's stock price rose $3.93, or 5.4 percent, to close at $77.14 on twice the normal trading volume. Before Wednesday, shares had been flat in 2012.
Boeing earned $923 million, or $1.22 per share, in the first quarter, compared with $586 million, or 78 cents per share, a year earlier. Excluding a gain from settling litigation, the company earned $1.11 per share, beating analysts' expectations of 96 cents.
Revenue rose 30 percent, to $19.4 billion, topping analysts' forecast of $18.5 billion.
The gains were driven by strength in sales of commercial airplanes, which trumped slow growth in the defense business. Boeing's 137 deliveries compared with 104 commercial planes delivered in the first quarter last year.
The company's commercial-plane backlog increased to $308 billion and had more than 300 orders for the 737 Max jetliner, which is expected to be ready in a few years to compete with the A320neo being developed by European rival Airbus. Both are single-aisle planes designed for short and medium-length flights.
Boeing has won 451 firm orders for the 737 MAX since the aircraft was launched last August, McNerney said.
In all, Boeing said it now has orders to build more than 4,000 commercial planes. The company did not comment on recent reports that it may be close to winning a big order from United Airlines. United has declined to comment.
Maxim Group LLC analyst Ray Neidl said the increase in deliveries showed that Boeing "is beginning to ring the cash register on its solid order placement." He predicted that orders will continue to rise for both small and large commercial jetliners.
First-quarter revenue from commercial planes jumped 54 percent, to $10.94 billion, while revenue from defense and space work grew just 8 percent, to $8.23 billion, reflecting tighter government budgets. The backlog of military planes grew 20 percent to $72 billion on orders for F-15 fighter jets and C-17 cargo planes.
Boeing raised the profit forecast for 2012 because it expects to set aside less money for litigation. The company predicted it will earn between $4.15 and $4.35 a share this year, up from a January forecast of $4.05 to $4.25. The new figure is still below the $4.48 per share that analysts expect.
Citigroup analyst Jason Gursky said Boeing was being conservative by not raising the 2012 forecast more. He said the company was probably holding back because of recent tornado damage at a supplier in Wichita, Kan., and questions about how quickly it can increase production of the new, large 787 jetliner, which fell far behind schedule.
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