Boeing Flies Over Global Trade Tensions -- WSJ
April 26 2018 - 3:02AM
Dow Jones News
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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