Boeing Co. profit climbs 61 percent in third quarter

Thursday, October 25, 2007

CHICAGO -- The world's No. 2 commercial airplane maker posted its best profit in nearly four years Wednesday as higher commercial airplane deliveries helped Boeing Co. earn $1.1 billion in the third quarter.

The results beat Wall Street expectations, but the company cautioned that a six-month delay in the launch of its new 787 "Dreamliner" plane would cut into its 2008 revenue and cause it to push 35 plane deliveries from 2008 into 2009.

That news sent the company's shares down during most of trading Wednesday, but analysts still were pleased with the company's better-than-expected third-quarter performance.

"Obviously it was a very solid quarter driven by the commercial aircraft division, but investors are more focused on the outlook for 2008 and beyond," said Edward Jones analyst Matt Collins. "The $100 billion question is when can they deliver the 787."

The company announced earlier this month that it would delay its first delivery of the 787 by six months to November or December 2008 because of problems it has encountered assembling the first few planes.

Executives said Wednesday that customers were frustrated by the delay, but orders for the plane continued at a steady clip. The company inked 73 new orders for the plane during the third quarter, bringing total firm orders to 710.

"They are not pleased, and we are obviously disappointed that we are causing them not to be pleased, but on the other hand, they're very, very supportive of the product," said Boeing chief financial officer James Bell. "And we really don't believe we're going to have a fatal issue with the customers."

For the quarter ending Sept. 30, Boeing's profit rose 61 percent and amounted to $1.44 per share, up from $694 million, or 89 cents per share, a year ago.

Revenue rose 12 percent to $16.5 billion from $14.7 billion a year ago.

On average, analysts surveyed by Thomson Financial forecast earnings per share of $1.24 on $16 billion in revenue.

"We continue to make solid progress across our businesses during the quarter, as evidenced by our financial results," said Boeing Chairman and Chief Executive Jim McNerney.

Boeing delivered 109 planes and booked 354 gross orders during the quarter, boosting its backlog reached a record-high $295 billion.

The Chicago-based company is on pace to overtake rival Airbus as the world's largest commercial airplane maker within a year.

"Their existing portfolio of aircraft continues to sell very well," said Morningstar analyst Brian Nelson. "The results came in better than expected and I think this is going to continue into their fourth quarter and through the first half of '08."

Boeing commercial airplanes division saw its operating income climb 46 percent to $945 million in the quarter, while revenue grew 23 percent to $8.3 billion.

Operating income at Boeing's integrated defense systems business fell six percent to $824 million, weighed down by a change in market conditions relating to the Delta II launch vehicle. Revenue rose 3 percent.

For the first nine months of the year, Boeing said its net income more than doubled to $3.04 billion, or $3.92 a share, from $1.23 billion, or $1.57 a share, a year ago. Nine-month revenue grew 11 percent to $48.9 billion from $44 billion a year earlier.

The company boosted its 2007 revenue guidance, while lowering its estimates for 2008 by about 6 percent.

The company said it expects to earn between $5.05 per share and $5.15 per share in 2007, with revenue of about $66 billion. That's up from its earlier estimate $4.80 to $4.95 per share on revenue of $65 billion.

But 2008 revenue is expected to be between $67.5 billion and $68.5 billion, down from a range of $71 billion to $72 billion. Earnings per share are expected to hold steady at $5.55 to $5.75 as productivity gains from Boeing's other units offset costs associated with the Dreamliner delay.

Boeing shares fell $1.05 to $93.90 in afternoon trading Wednesday. Its shares have traded in a 52-week range of $77.77 to $107.83.

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