BA Boeing Co

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 (April 26, 2018).

Boeing Co. aims to have a new facility in China ready to complete some of its 737 jets by the end of this year, a sign that the aerospace giant is taking trade tensions in stride.

Chief Executive Dennis Muilenburg said Wednesday that construction is under way on a finishing center near Shanghai that Boeing has said it needs to compete with rival Airbus SE, which already builds jets in China.

His comments on a post-earnings call came as Boeing's first quarter results soared past analysts' expectations, and as the company boosted its full-year guidance for profits and operating cash flow. The new guidance signals Boeing is working through challenges in the broader aerospace supply chain related to engines and other plane parts as it and Airbus -- which reports Friday -- boost jetliner production.

The results also suggest that Boeing's business hasn't been hurt by trade-related rhetoric between officials in the U.S. and China. Mr. Muilenburg said Boeing hadn't been affected by to-and-fro tariff proposals from the U.S. and China.

China accounts for a fifth of Boeing's jetliner deliveries. The new facility to install seats and other fittings such as in-flight entertainment systems had drawn scrutiny from then-presidential candidate Donald Trump, who cited it as an example of U.S. jobs being moved overseas.

Mr. Muilenburg has said such overseas facilities aren't a direct threat to the U.S. jobs, and will help protect and expand domestic employment. He said the effort is an essential part of doing business in China.

The aerospace company will continue assembling 737s at its plant near Seattle but send some planes to China for completion at the new plant, a joint venture with the state-controlled Commercial Aircraft Corp. of China Ltd.

Mr. Muilenburg also said on Wednesday that Boeing is following guidance from U.S. officials on potential airplane sales to carriers in Iran. He said planned deliveries of jets had been deferred beyond 2018 as officials in Iran, the U.S. and Europe debate sanctions tied to Iran's nuclear program

Potential sales to Iran aren't in Boeing's order book, which has swelled to more than 5,800 jets worth $415 billion.

First-quarter profits beat expectations as Boeing continued to boost productivity and aimed to raise margins to the midteen range from around 11%. The company didn't book another charge on its delayed military refueling tanker program, though it said costs had increased, but added its defense and services units contributed to the rise in earnings.

Boeing said its profit rose to $2.48 billion in the quarter from $1.58 billion a year earlier, with per-share earnings up to $4.15 from $2.54. Stripping out pension costs, profit of $3.64 a share was well ahead of the $2.58 analyst consensus.

The company boosted its guidance for full-year profit by 50 cents a share to a range of $14.30 to $14.50, and added $500 million to its forecast for operating cash flow, with a new top end of $15.5 billion.

Write to Doug Cameron at doug.cameron@wsj.com

(END) Dow Jones Newswires

April 26, 2018 02:47 ET (06:47 GMT)

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