Boeing's fourth quarter profit tops forecast

Wednesday 30 January 2013 14.34
Boeing says its main priority is to fix Dreamliner problems
Boeing says its main priority is to fix Dreamliner problems

Boeing said today that its top priority this year is fixing the battery problems that grounded its 787.

The company made the pledge while reporting a fourth-quarter profit that topped Wall Street estimates, as rising profits from commercial jets offset a smaller profit from defence work.

"Our first order of business for 2013 is to resolve the battery issue on the 787 and return the airplanes safely to service with our customers," said Jim McNerney, Boeing's chairman, president, and chief executive.

It is not clear how long that will take, and Boeing did not make any predictions today.

The 787s are grounded while investigators try to figure out what caused two battery incidents earlier this month, including a fire on a plane parked in Boston.

US aviation officials have asked Boeing for a full operating history of the batteries on the 787s. Japan's All Nippon Airways confirmed that it had replaced batteries on its 787 aircraft 10 times because they did not charge properly or connections with electrical systems failed. Japan Airlines also said it had replaced 787 batteries.

Boeing is still building 787s even though deliveries are halted. It is still aiming to deliver at least 60 of the planes this year, which would keep it on pace for its current rate of building five per month.

Boeing has said it wants to be building ten 787s per month by the end of this year. It said it expects to deliver 635 to 645 commercial jets this year, up from 601 deliveries in 2012, when it overtook Airbus for the first time since 2003. The European aircraft maker expects to deliver more than 600 planes this year.

Boeing said it earned $978m in the latest quarter, or $1.28 per share. That was down 30% from a profit of $1.39 billion, or $1.84 per share, a year earlier, which included a big tax benefit of 52 cents per share.

But the quarterly profit topped the $1.19 per share expected by analysts. Revenue rose 14% to $22.3 billion, matching analyst estimates.

Boeing is predicting 2013 earnings of $5 to $5.20 per share, with revenue of $82 billion to $85 billion. The outlook assumes "no significant financial impact" from the 787 being out of service.

Analysts had been expecting a 2013 profit of $5.17 per share on revenue of $88.13 billion.

For all of 2012, the company said its net income fell 3% to $3.9 billion, or $5.11 per share. Revenue rose 19% to $81.7 billion.

Last year's deliveries of its new 787 as well as its revamped 747-8 brought in cash - the 787 lists for more than $200m each - but they actually hurt profits because the planes cost more to build than what Boeing collects.

Profit margins for commercial planes shrank slightly, even as revenue rose 32% to $14.16 billion in the fourth quarter, and profits rose 29% to $1.27 billion. Boeing is also faced with a slowdown in its defence business.

Defence profits fell 13% to $751m in the fourth quarter, while revenues in the division fell 2% to $8.34 billion.

Keywords: boeing, dreamliner