Business | Aviation
Boeing suffers 19% decrease in earnings
Company takes charge on a delayed military contract and suffers knock-on effects of Dreamliner programme.
- Reuters
- Published: 00:03 July 24, 2008
New York: Boeing on Wednesday reported a greater-than-expected 19 per cent drop in quarterly profit as it took a charge on a delayed military plane contract and suffered knock-on effects of its troubled 787 Dreamliner programme.
The world's biggest-selling plane maker and the Pentagon's No 2 contractor had lower sales at both its commercial and military operations, but held to its financial forecasts for this year and next, citing strong demand for its products.
The Chicago-based company, along with Airbus, a unit of EADS, is hoping high oil prices will spur demand for its new fuel-efficient planes, but shares of both companies have suffered over the past few months as investors worry that prolonged increases in oil prices will prompt a global recession.
Its shares, which have fallen 36 per cent from their all-time high a year ago, hurt by repeated delays on its new 787 Dreamliner and rising oil prices, fell a further 4 per cent in premarket trading to $66.37.
"The real surprise of this quarter is the unusually soft performance at commercial aircraft," Robert Stallard of Macquarie Securities said in a note to clients. "However, there is nothing in this quarter which we view as a fundamental, long-term problem."
Boeing, which beat archrival Airbus in the race for orders last year, reported second-quarter net profit of $852 million, or $1.16 per share, compared with $1.05 billion, or $1.35 per share, a year earlier.
Profit was cut by a charge of $248 million for delays on a surveillance plane the company is building for Australia, known as Wedgetail. Boeing warned about the charge, which cut 22 cents off earnings per share, earlier this month.
Overall revenue was down very slightly to $16.96 billion, below the $17.28 billion expected by analysts.
The real surprise of this quarter is the unusually soft performance at commercial aircraft. However, there is nothing in this quarter which we view as a fundamental, long-term problem."
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