Boeing Handily Beats Second-Quarter Expectations

EarningsReuters

Boeing Co (NYSE:BA) reported a better-than-expected quarterly profit, helped by booming demand for commercial aircraft.

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Commercial aircraft deliveries rose 9 percent to 197, helping boost second-quarter revenue by 11 percent - the biggest increase in two years.

Boeing's shares were up 1.5 percent at $147.20 in premarket trading on Wednesday.

The results include a $536 million charge to account for problems with the fuel system on the KC-46A aerial refueling tanker it is developing for the U.S. Air Force.

The charge, announced last week, is the second Boeing has taken on the troubled tanker project, bringing the total after-tax charges to just over $800 million.

The world's biggest commercial planemaker, also a major defense contractor, had beaten European rival Airbus to win the contract in 2011.

Boeing has said the program remains on track for delivering the initial 18 tankers to the U.S. Air Force by August 2017 and building 179 tankers by 2027.

The company reduced its 2015 core earnings forecast to reflect the charge related to the program. It now expects core earnings of $7.70-$7.90 per share for 2015, down from its previous forecast of $8.20-$8.40 per share.

Analysts expect earnings of $7.88 per share for 2015, according to Thomson Reuters I/B/E/S.

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"The latest KC-46 charge should again remind investors that Boeing is more complex than a simple 787 cash story," RBC Capital Markets analyst Robert Stallard wrote in a note to clients.

"Boeing has a broad array of commercial and defense products, and the tanker charge is a sign that not all of them are heading in the right direction."

Boeing has been trying to cut production costs for its 787 Dreamliner aircraft and has cranked up production of jetliners to boost profitability and allay investor concerns about cash flow.

"Overall, our outlook for the second half of the year remains positive," Chief Executive Dennis Muilenburg, who took over from Jim McNerney just three weeks ago, said in a statement.

The Chicago-based company's net profit fell 33 percent to$1.11 billion, or $1.59 per share, for the second quarter ended June 30, from $1.65 billion, or $2.24 per share, a year earlier.

The tanker charge reduced earnings by 77 cents per share.

Core earnings, which exclude pension and other costs, fell to $1.62 per share from $2.42.

Revenue rose to $24.54 billion from $22.05 billion.

Analysts expected earnings of $1.37 per share and revenue of $24.22 billion.

Up to Tuesday's close, Boeing's shares had risen nearly 12 percent this year, compared with a 1.5 percent fall in the Dow Jones U.S. Aerospace Index.

(Reporting by Sweta Singh in Bengaluru; Editing by Saumyadeb Chakrabarty)

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