Boeing Boosts Profit Forecast After Strong Quarter -- 4th Update
July 26 2017 - 4:17PM
Dow Jones News
By Doug Cameron
Boeing Co. continues to clamp down on the cost of building
jetliners, boosting profits at the world's largest aerospace
company and driving shares up more than 9%.
The company on Wednesday reported forecast-beating earnings for
the fifth quarter in a row and lifted its full-year targets again
as it boosts production from an order book of 5,700 aircraft and
defense equipment worth almost $500 billion.
Boeing has emerged from a troubled period beset by problems
building new jets such as the 787 Dreamliner, with a smoother
launch of new models and focus on reducing expenses through a mix
of thousands of job cuts and more efficient factories.
It is also chasing a bigger share of the market for maintaining
aircraft for airlines and military customers, a pursuit that has
unsettled relations with some of the suppliers that are crucial to
boosting output of its commercial jetliners.
"There's some sense of nervousness and uncertainty as we ramp
up," Chief Executive Dennis Muilenburg said. "There's going to be
some places where we make some tough decisions, develop
alternatives."
He said Boeing was keeping a close watch on the supply chain as
it pursues plans to boost production of its 737 workhorse jet by
more than a third over the next three years, countering slower
sales of its larger widebody planes.
The slimmer workforce and new manufacturing processes are also
being used to test the potential for profitably building an all-new
twin-aisle jet seating more than 200 passengers.
Boeing shares have climbed by almost 50% this year as investors
become more confident that the rise in global airline passenger
traffic will ensure airlines take all of the jet orders placed in
recent years with the U.S. company and rival Airbus SE, which
reports Thursday.
The latest surge in Boeing's stock Wednesday made it the largest
component in the Dow Jones Industrial Average. In late trading,
Boeing shares jumped $20, or 9.5%.
Boeing's cost-cutting efforts helped it generate more than twice
as much free cash as analysts expected in the latest quarter,
prompting a bump to planned stock buybacks. It is also prepaying
big pension commitments due over the next four years.
Mr. Muilenburg said free cash flow is expected to rise year on
year through the end of the decade. Boeing plans to lift stock
buybacks to $10 billion this year and will return all of its free
cash to shareholders in the form of repurchases and dividends.
Boeing reported quarterly profit of $1.76 billion, or $2.89 a
share, swinging from a $234 million loss a year ago that was
weighed down by charges on its commercial and military
programs.
The company still expects to deliver 760 to 765 jetliners this
year, and Mr. Muilenburg said plans to deliver aircraft to airlines
in Iran next year remain on track. Its order book rose to $482
billion.
Boeing boosted its earnings guidance for the second time this
year, adding 60 cents for a range of $9.80 to $10 a share. Its
sales guidance was unchanged at $90.5 billion to $92.5 billion.
--Ezequiel Minaya contributed to this article.
Write to Doug Cameron at doug.cameron@wsj.com
(END) Dow Jones Newswires
July 26, 2017 16:02 ET (20:02 GMT)
Copyright (c) 2017 Dow Jones & Company, Inc.
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