Boeing Boosts Profit Forecast After Strong Quarter -- 3rd Update

By Doug Cameron Features Dow Jones Newswires

Boeing Co. continues to clamp down on the cost of building jetliners, boosting profits at the world's largest aerospace company and driving shares up nearly 9%.

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The company on Wednesday reported forecast-beating earnings for the fifth quarter in a row and lifted its full-year targets again as it boosts production from an order book of 5,700 aircraft and defense equipment worth almost $500 billion.

Boeing has emerged from a troubled period beset by problems building new jets such as the 787 Dreamliner, with a smoother launch of new models and focus on reducing expenses through a mix of thousands of job cuts and more efficient factories.

It is also chasing a bigger share of the market for maintaining aircraft for airlines and military customers, a pursuit that has unsettled relations with some of the suppliers that are crucial to boosting output of its commercial jetliners.

"There's some sense of nervousness and uncertainty as we ramp up," Chief Executive Dennis Muilenburg said. "There's going to be some places where we make some tough decisions, develop alternatives."

He said Boeing was keeping a close watch on the supply chain as it pursues plans to boost production of its 737 workhorse jet by more than a third over the next three years, countering slower sales of its larger widebody planes.

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The slimmer workforce and new manufacturing processes are also being used to test the potential for profitably building an all-new twin-aisle jet seating more than 200 passengers.

Boeing shares have climbed by almost 50% this year as investors become more confident that the rise in global airline passenger traffic will ensure airlines take all of the jet orders placed in recent years with the U.S. company and rival Airbus SE, which reports Thursday.

The latest surge in Boeing's stock Wednesday made it the largest component in the Dow Jones Industrial Average. In late trading, Boeing shares jumped $19, or 8.9%.

Boeing's cost-cutting efforts helped it generate more than twice as much free cash as analysts expected in the latest quarter, prompting a bump to planned stock buybacks. It is also prepaying big pension commitments due over the next four years.

Mr. Muilenburg said free cash flow is expected to rise year on year through the end of the decade. Boeing plans to lift stock buybacks to $10 billion this year and will return all of its free cash to shareholders in the form of repurchases and dividends.

Boeing reported quarterly profit of $1.76 billion, or $2.89 a share, swinging from a $234 million loss a year ago that was weighed down by charges on its commercial and military programs.

The company still expects to deliver 760 to 765 jetliners this year, and Mr. Muilenburg said plans to deliver aircraft to airlines in Iran next year remain on track. Its order book rose to $482 billion.

Boeing boosted its earnings guidance for the second time this year, adding 60 cents for a range of $9.80 to $10 a share. Its sales guidance was unchanged at $90.5 billion to $92.5 billion.

--Ezequiel Minaya contributed to this article.

Write to Doug Cameron at doug.cameron@wsj.com

(END) Dow Jones Newswires

July 26, 2017 15:58 ET (19:58 GMT)