Bombardier Q3 profit soars to $192 million

Transportation giant beats analyst expectations based on improved revenues in both aerospace and railway divisions.

Comments Off on Bombardier Q3 profit soars to $192 million December 1, 2011
by Canadian Press

Montreal — Bombardier said Thursday its profits soared by more than 30 per cent to US$192 million in the third quarter as it recorded improvements in both the aerospace and railway segments.

The Montreal-based company, which reports in U.S. dollars, earned 11 cents per diluted share for the period ended Oct. 31, a gain of three cents compared to the third quarter of 2010. Revenues increased 16 per cent from the prior third quarter to $4.6 billion.

Bombardier was expected to earn 10 cents per share in profits on $4.5 billion in revenue for the period, according to analysts polled by Thomson Reuters. That compared to eight cents on $4.01 billion in the same period last year.

“Again this quarter, both groups delivered good results… in a still volatile economic environment,” stated president and CEO Pierre Beaudoin.

The railway division’s strong backlog promises good revenues going forward, Beaudoin said. And aerospace deliveries and backlog have increased by 16 per cent since the beginning of the year, “proving the popularity of our families of aircraft, especially in the large business jet category,” he added.

“Our focus on execution permits us to continue to deliver good results in these uncertain economic times.”

Beaudoin said Bombardier’s signature of a memorandum of understanding to invest up to $200 million in a manufacturing facility in Morocco illustrates its commitment to continue developing “a global competitive manufacturing footprint.”

The commercial aerospace business has been affected by slow orders for regional jets and Q400s, which has led to production rate decreases. Bombardier said it delivered 68 aircraft, including 43 business aircraft during the quarter. That compared to 51 planes, including 31 business jets a year ago. It also received 34 net orders, 11 more than a year ago.

The company has a solid backlog of business jets and is expected to benefit from increased deliveries of larger Global-series aircraft next year.

The total company backlog increased to $55.3 billion, from $52.7 billion a year ago.

The transportation division earned $172 million on $2.3 billion of revenues, representing a 7.4 per cent profit margin. That compared to seven per cent last year.

Aerospace earned $129 million on $2.3 billion of revenues for a 5.6 per cent margin, compared to 5.4 per cent last year.

Analysts said the results were slightly better than forecast because both divisions recorded stronger profits and the company’s tax rate was a little lower.

“Business jet orders still solid, but more [is] needed in regional,” said Cameron Doerksen of National Bank Financial.

Bombardier had 30 net new orders for business jets, up from 13 a year ago. But there were only four net orders for regional aircraft, pushing the backlogs to low levels (six months for the Q400 and 12 months for CRJs).

“We have previously suggested that new orders for regional aircraft could materialize soon, but Bombardier will need to close on some deals in the coming months if it is to avoid further production rate cuts,” he wrote in a research note.

Bombardier’s free cash flow usage was much higher than had been expected at $346 million. The increase resulted from the ramping up of production on transportation contracts where deliveries have been delayed.

“We do not read too much into the free cash flow miss as it was related to temporary issues on the transportation side,” said Benoit Poirier of Desjardins Capital Markets.
© 2011 The Canadian Press