Bombardier Q3 revenue misses analyst estimates
Profits up but revenue down $300M based mainly on weak rail division results.
Montreal — Bombardier Inc. says it expects up to US$150-million in restructuring charges in the fourth quarter as the result of a 1,200-employee workforce reduction linked to the closure of a rail equipment plant in Germany.
The Montreal-based rail equipment and aircraft manufacturer said the worldwide workforce reduction included its plant in Aachen, Germany, but provided no details about timing or whether the downsizing affects other locations.
The announcement came in Bombardier’s third-quarter financial report, which showed the rail division continues to face weak results. Bombardier also acknowledged a widely expected delay in the first flight of the new CSeries commercial jet until the first half of 2013.
Bombardier’s net income in the three months ended Sept. 30 rose to US$212 million but its revenues came in lighter than analysts had expected as weakness at its rail equipment division continued.
The Montreal-based company’s revenue slipped to US$4.3 billion, down about $300 million from the third quarter of 2011. Most of the decline was from Bombardier Transportation while revenue at Bombardier Aerospace fell slightly.
The company’s net income was equal to 12 cents per share and compares with US$192 million or 11 cents per share a year earlier. Bombardier had been expected to earn 11 cents per share in adjusted profits on US$4.67 billion of revenues in the third quarter, according to analysts polled by Thomson Reuters. That compares to 12 cents per share of adjusted earnings on US$4.3 billion of revenues in the prior year.
The company, which is gearing up to build the next-generation CSeries commercial jets, said it now expects the plane to have its first flight before the end of next June — a move that had been anticipated.
“In Aerospace, since the beginning of the year, substantial headway has been made in the CSeries development program and testing is progressing well,” said Pierre Beaudoin, President and Chief Executive Officer, Bombardier Inc.
Beaudoin said the company required more time to meet certain CSeries program milestones but others had been met and the company and its suppliers have “now fully harmonized all commitments to the program’s schedule.”
“Therefore, the CS100 aircraft’s first flight will now occur by the end of June 2013 — a timeline that all parties have agreed is achievable,” Beaudoin said. “We will continue to give regular updates on the program, with a more detailed review during the first quarter of next year.”
Revenue at Bombardier Aerospace was US$2.26 billion, compared with US$2.30 billion a year earlier. Revenue at Bombardier Transportation, was $2.07 billion — down from $2.32 billion a year earlier.
Bombardier’s backlog of orders at the end of September was US$26.1 billion, up 18.6 per cent from the end of 2011.
The Montreal-based company, which reports in U.S. dollars, was expected to face a soft quarter due to lower deliveries of planes and underwhelming performance of its transportation division for the third quarter in a row.
Bombardier’s shares could get a boost if it wins orders from Delta Airlines for 70 new regional jets, Indonesia’s Garuda for 50 new turboprops as well as regional orders from United-Continental, US Airways and American.
On the rail front, South Africa is evaluating bids for a 20-year contract to supply 7,200 passenger rail cars, worth US$14 billion and a Chinese rail contract is restarting following a government pause due to a fatal high-speed rail accident.
Bombardier also faces strikes on two fronts. Workers at the Learjet facility in Wichita, Kan., are off the job for a fifth week. More than 330 railway workers at the La Pocatiere, Que., plant walked off the job last week over outsourcing, pensions and wages.
It has 33,600 employees and production facilities in 24 countries. It is the world’s third-largest commercial aircraft manufacturer, largest maker of business jets and trains.
© 2012 The Canadian Press