Boeing Boosts Outlook Despite Tanker Problems -- Update

By Doug Cameron Features Dow Jones Newswires

Boeing Co. raised its full-year profit and cash-flow guidance even as quarterly earnings fell from a year earlier and the company took another charge on its military tanker program.

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Still, the world's largest aerospace company beat expectations for the sixth quarter in a row after a record 202 commercial airliner deliveries in the latest period.

Boeing shares were lower in premarket trading, with investors likely focused on the performance of the company's new services unit. The unit aims to double its market share of selling spares and services and boost revenue from the business to $50 billion over the next several years, but the initial margins of 14.2% in the latest quarter were shy of some analysts' expectations.

The push into services has irked many Boeing suppliers, who rely on the segment for their own profits. United Technologies Corp. revealed Tuesday that it doesn't make any money on new parts sold to Boeing, just on spares.

Executives will also likely face questions on a coming investor call about the potential fallout from a planned deal between Airbus SE and Bombardier Inc. Boeing's challenge to state subsidies for Bombardier helped drive talks between the two rival plane makers.

Boeing added 10 cents to the midpoint of its full-year profit guidance and another $250 million in operating cash flow, a key driver in the near-doubling of its stock price over the past year. It also repurchased another $2.5 billion of its own shares.

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Profits fell to $1.85 billion in the third quarter from $2.28 billion a year earlier, with the latter lifted by a large tax gain. Per-share earnings declined to $3.06 from $3.60 but were $2.72 after stripping out certain pension items, 6 cents ahead of consensus.

The latest quarter included $329 million in additional costs for the KC-46A Pegasus tanker, having already taken about $1.5 billion in charges on the program. Boeing is unlikely to meet its target of delivering the first of a new fleet of aerial refueling tanker jets by the end of the year.

Boeing's stock fell almost 1% to $263.70 in recent premarket action.

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

(END) Dow Jones Newswires

October 25, 2017 08:45 ET (12:45 GMT)