By Frederic Tomesco / Bloomberg
Bombardier Inc. burned through less cash than expected in its last quarter as the majority owner of the C Series jetliner, buoyed by rising sales of aircraft parts and rail equipment.
Revenue rose in the second quarter and Canada’s largest aerospace company reported a surprise profit, according to a statement Thursday. Bombardier also reaffirmed its sales, earnings and cash-flow targets for 2018 and 2020.
The results boost Chief Executive Officer Alain Bellemare’s drive to transform the company as he starts the second half of a five-year turnaround plan designed to increase profit and reduce debt. Having cut jobs, bolstered liquidity and teamed up with Airbus SE on the C Series, the CEO is now working to push the planemaker’s next big revenue generator, the Global 7500, into service later this year.
“With our heavy investment cycle largely behind us, our focus is now on ramping-up production and improving operational efficiency to accelerate growth,” Bellemare said in the statement.
Bombardier’s capital expenses exceeded its operating cash flow by about $370 million in the three months ending June 30. The negative free cash flow was less than the $546 million average of analysts’ estimates compiled by Bloomberg. Including the one-time proceeds from a Toronto real estate sale in June, Bombardier generated free cash flow of $232 million for the period.
Adjusted earnings fell to 3 cents a share in the second quarter. Analysts had predicted a loss of a cent, according to the average estimate compiled by Bloomberg. Sales rose 2.8 percent to $4.26 billion, compared with the average expectation of $4.22 billion.
“Based on the early read we believe these results should be well received by the market today,” Walter Spracklin, an analyst with RBC Capital Markets in Toronto, said in a note to clients. “Overall looks to be a solid quarter.”
Sales growth was strongest in the rail unit, with an 11 percent increase to $2.26 billion. Earnings before interest, taxes and special items in trains — Bombardier’s biggest business, even before the handover of the C Series — soared 16-fold to $163 million.
The same profit measure in business jets climbed 9 percent to $108 million and more than doubled in the the aerostructures unit to $65 million. On the same basis, the loss in the commercial aircraft unit widened to $668 million.
Bombardier delivered eight units of the former C Series jet in the quarter before ceding control of the program to Airbus on July 1. The first-half total of 13 implies Airbus will need to pick up the pace in the second half to reach Bombardier’s stated goal of delivering 40 C Series jets for all of 2018.
Airbus renamed the jet family the A220.
Bombardier’s widely traded Class B shares fell 3.1 percent to C$4.75 on Wednesday. The stock’s 57 percent gain this year is the fourth-biggest advance on Canada’s benchmark S&P/TSX Composite Index.
Talk to us
> Give us your news tips.
> Send us a letter to the editor.
> More Herald contact information.
