Boeing ups earnings forecast, beats estimates

The Boeing Co., the world’s largest planemaker, boosted its full-year earnings forecast after second-quarter profit surged on higher aircraft deliveries and lower 787 Dreamliner production costs.

Earnings excluding some pension expense will be $6.20 to $6.40 a share in 2013, Boeing said today, up from a range of $6.10 to $6.30 in an April projection. Profit on that basis was $1.67 a share last quarter, topping the $1.58 average estimate of 20 analysts surveyed by Bloomberg.

Boeing is reaping rewards from a faster assembly pace for its 737s, 777s and 787s as a global aviation boom boosts demand for large jets. The planemaker shipped 169 commercial aircraft in the quarter, up 13 percent from a year earlier, including 16 Dreamliners delivered after regulators cleared the plane to fly in April. Boeing handed over six 787s a year earlier.

“The 787 program has been progressing well through production after a very difficult launch,” Douglas Harned, an aerospace analyst with Sanford C. Bernstein &Co. in New York, said in a July 19 research note. “Progress on cost reduction also appears to be going well.”

Boeing shares rose 1.8 percent to $109.70 at 7:42 a.m. before regular New York trading.

Revenue rose 9 percent to $21.8 billion as Boeing delivered more higher-margin 777 and 737 jets than a year earlier and its defense unit landed international business to help blunt the impact of U.S. budget cuts. Analysts had predicted sales of $20.8 billion.

Pension Expenses

Since January, Boeing has used a profit measure — so-called core earnings per share — that it said gives a clearer picture by adjusting for market fluctuations in pension expenses. Without the adjustment, net income was $1.09 billion, or $1.41 a share, compared with $967 million, or $1.27, a year earlier.

Boeing’s incremental manufacturing costs for each 787 continue to drop as it smoothes out production kinks and gains sales, falling to $73 million each in the first quarter from $103 million in the previous quarter, Carter Copeland, a Barclays analyst in New York, wrote in a July 22 report. He expected deferred development costs to decline to $60 million a jet in the second quarter, boosting free cash flow.

The latest setback for the program, a July 12 fire aboard a Dreamliner parked at London’s Heathrow airport, “shouldn’t have a material impact on Boeing’s valuation,” Harned said.

Investigators are focused on an “off-the-shelf” emergency beacon rather than a new 787 technology, raising the likelihood the incident is a “one-off” issue costing tens or hundreds of millions of dollars, rather than billions, he said.

The global fleet was grounded for three months this year to fix lithium-ion battery meltdowns.

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