Boeing earns $623 million in first quarter
CHICAGO (AP) – Boeing Co. swung to a $623 million profit in the first quarter and raised estimates Wednesday for revenue and earnings into 2005, citing signs of stabilization in the long-shaky commercial jet market and impressive sales from its military business. CEO Harry Stonecipher said he was encouraged by the improving airplane market but acknowledged continuing difficulties with Boeing’s efforts to end controversies over its ethical practices, which have left both a lucrative air-tanker deal and its ability to bid on government rocket contracts on hold for months.
“It’s certainly frustrating,” he said on a conference call. “We’re trying to get everything out in front, be very open about what’s going on and deal with every problem as it raises its ugly head.”
Ethical problems aside, Boeing’s large backlog of key military contracts helped revenue at its defense and space unit surge 18 percent from a year earlier, enabling it to post far better earnings than had been expected. Net income amounted to 77 cents a share, compared with a net loss of $478 million, or 60 cents a share, a year earlier.
The company’s per-share earnings, which got a 12-cent boost from interest from a federal tax refund, easily outpaced analysts’ consensus estimate of 44 cents per share – compiled by Thomson First Call before Boeing indicated last week that it would exceed it by a significant amount.
Revenues were $12.96 billion, up 6 percent from $12.26 billion a year earlier.
The defense and space unit accounted for 57 percent of revenue, or $7.4 billion, led by a 13 percent jump in sales of military aircraft and weapon systems.
The once-dominant commercial airplanes business saw modest gains in both deliveries, up to 76 from 71 a year earlier, and revenues, up 6 percent to $5.33 billion.
Operating earnings were a solid $352 million.
Aerospace analyst Paul Nisbet of Rhode Island-based JSA Research credited Boeing for good deliveries and earnings but said the 18 percent increase in defense sales isn’t sustainable.
“They were very strong, but I view them more like a lump going through a snake and dropping in quarter one,” he said. “It’s done – it does not significantly change the outlook.”
Stonecipher said Boeing’s commercial airplane unit should benefit from an overall market improvement attributable to the economic recovery, which has boosted airline traffic. “It is well-positioned for growth as the market recovers,” he said.
He reiterated that the company expects to see more orders soon for the 7E7 – a program formally launched on Monday as Boeing’s first new jet in more than a decade.
“We expect orders to come from Europe and the U.S. as well, but Asia certainly is the strongest market right now,” the CEO said.
Boeing, which last year fell behind rival Airbus in commercial airplane manufacturing for the first time, said it now anticipates deliveries will improve to 300 in 2005, up from about 285 this year, and boosted its revenue estimate by $2 billion to a range of $57 billion and $59 billion.
It raised guidance for 2004 earnings by 30 cents per share, to a range of between $2.05 and $2.25 per share. The Thomson First Call consensus estimate was $1.85. Boeing now pegs 2005 earnings at between $2.20 per share and $2.45 per share – up 25 cents from its previous guidance.
Stonecipher, who came out of retirement in December to replace Phil Condit after a series of ethical lapses in Boeing’s defense unit, conceded that he continues to be dealt surprise news as he tries to deal with the company’s legal and ethical difficulties. He said the legal expenses are weighing on profits but that those costs were being built into the company’s earnings guidance.
“It impacts earnings as we go because we certainly have a lot of legal expense on a daily basis,” he said.
Boeing shares rose 76 cents to $44.31 in afternoon trading Wednesday on the New York Stock Exchange.
___
On the Net:
http://www.boeing.com
AP-ES-04-28-04 1522EDT