Boeing reports first quarter profit decline, reaffirms guidance

written by australianaviation.com.au | April 28, 2016
KC-46A F/A-18 Milestone C
The KC-46A refuels a F/A-18. (John D Parker)

Boeing has reaffirmed its 2016 forecast for revenue and aircraft deliveries after posting a nine per cent drop in net profit in the first quarter, when it delivered fewer aircraft and took a one-off change on its KC-46 tanker project.

The manufacturing giant said net earnings (or net profit) fell nine per cent to US$1.2 billion in the three months to March 31 2016, compared with US$1.336 billion in the prior corresponding period.

Revenue rose two per cent to US$22.6 billion, Boeing said in its first quarter results published on Wednesday (US time).

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The company’s financial guidance of full year revenue for calendar 2016 coming in between US$93-95 billion was unchanged from its previous forecast published in January.

Projected aircraft deliveries was also unchanged at 740-745 aircraft in 2016. The company delivered 762 aircraft in calendar 2015.

Boeing chief executive Dennis Muilenburg said the company was pleased with the first quarter performance and the outlook for the year remained positive.

“Higher year-over-year deliveries of military aircraft and continued solid operating performance on core production programs drove revenue growth and strong cash flow for Boeing in the first quarter,” Muilenburg said in a statement.

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“This performance enabled our ongoing investments in new product innovation and in our people, and the return of significant cash to shareholders through stock repurchases and dividends.”

The company said it took a $US162 million pre-tax charge on its KC-46 tanker program to “maintain schedule with concurrency between late-stage development testing and the transition to initial production”.

“We are making the investments necessary to meet our customer commitments, deliver the initial production aircraft on schedule, and transition the program into full production,” Muilenburg said of the KC-46 program.

There are four KC-46 test aircraft currently in flight test.

There was also a US$70 million charge on the Boeing 747 program.

Boeing said its Commercial Airplanes division delivered 176 aircraft in the first quarter, eight fewer than the 184 aircraft delivered in prior corresponding period, resulting in a six per cent decline in revenue to US$14.4 billion.

There were 121 net orders in the three months to March 31, Boeing said, adding there was a “strong” backlog of more than 5,700 aircraft valued at US$424 billion.

Boeing said its Defense, Space & Security business lifted first quarter revenue 19 per cent to US$8 billion, with the result underpinned by higher F-15 and C-17 deliveries.

Boeing announced in March it planned to reduce its Commercial Airplanes workforce by 4,000 people by the middle of 2016 in an effort to cut costs.

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