Boeing Tops Expectations -- WSJ
July 27 2017 - 3:02AM
Dow Jones News
Shares surge 10% as aerospace firm raises full-year profit
target, boosts production
By Doug Cameron
This article is being republished as part of our daily
reproduction of WSJ.com articles that also appeared in the U.S.
print edition of The Wall Street Journal (July 27, 2017).
Boeing Co. continues to clamp down on the cost of building
jetliners, boosting profits at the world's largest aerospace
company and on Wednesday driving its shares up nearly 10%.
The company reported forecast-beating earnings for a fifth
quarter in a row on Wednesday. It also 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 long stretch beset by problems
building new jets such as the 787 Dreamliner, with the smoother
launch of new models and a 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 works 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
gain confidence that the rise in global airline passenger traffic
will ensure that airlines follow through on all of the jet orders
placed in recent years with the U.S. company and rival Airbus SE,
which reports Thursday.
The surge in Boeing's stock Wednesday, up 9.9% at $233.45, made
it the largest component in the Dow Jones Industrial Average,
overtaking Goldman Sachs Group Inc.
Boeing's cost-cutting efforts helped it generate more than twice
as much free cash as analysts were expecting for the latest
quarter, prompting a bump to planned stock buybacks. The company 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 year-earlier loss of $234 million that
reflected charges on its commercial and military programs. Revenue
fell to $22.74 billion from $24.76 billion, after Boeing delivered
fewer jets as it transitioned to an upgraded version of the 737 and
slowed output of its 777 jetliner.
The company still expects to deliver 760 to 765 jetliners this
year, and Mr. Muilenburg said plans to sell aircraft to airlines in
Iran next year remain on track. Its order book rose to $482
billion.
Boeing boosted its 2017 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 27, 2017 02:47 ET (06:47 GMT)
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