Shares of Textron (NYSE:TXT) plunged 12% on Wednesday as the world’s largest maker of business aircraft spooked Wall Street by taking an axe to its outlook amid tepid demand for its Cessna jets.
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In addition to cutting its 2013 earnings guidance below the Street’s view, Textron also disclosed weaker-than-expected first-quarter earnings and plans to cut costs.
The Providence, R.I.-based company said it earned $119 million, or 41 cents a share, last quarter, compared with a profit of $118 million, or 40 cents a share, a year earlier.
On a non-GAAP basis, Textron said it earned 40 cents a share, trailing consensus calls from analysts by a nickel.
Revenue was unchanged at $2.86 billion, narrowly missing expectations for $2.89 billion.
Cessna posted a loss of $8 million last quarter, compared with a loss of $6 million the year before, and its backlog shrank by $28 million from the end of 2012 to $1.03 billion.
“Demand in the business jet market was softer than expected,” CEO Scott Donnelly said in a statement.
But Textron really disappointed shareholders by downgrading its full-year earnings forecast by 20 cents a share to a range of $1.90 to $2.10. Even the high end of that new range would miss the Street’s view of $2.26.
Textron warned that it now anticipates a decline in business jet deliveries.
The company also revealed plans to adjust production scheduled and implement other cost-cutting moves at its Cessna division.
“While we are taking these immediate actions, we believe the global business jet market still has significant long-term growth potential and we remain committed to our new product plans,” Donnelly said.
Textron saw its stock retreat 11.67% to $25.92 during recent trading Wednesday morning, trimming its 2013 gain to just 4.5%. The S&P 500 was off 1.6%.