Boeing Net Profit Spikes
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Boeing Co (NYSE: BA) reported a net profit of $923 million, an increase of 58 percent, or $337 million, up from $586 million, over a year earlier. Revenue for the company increased 30 percent to $19.4 billion, higher than analysts' expectations of $18.4 billion. The company forecasted earnings per share of $4.35 for the year on revenue of $78-80 billion.
Much of the success came from an increase in commercial airplane deliveries. The commercial airplane and defense products manufacturer receives the bulk of payments for sold products upon delivery. Boeing has boosted production by more than 60 percent over the last four years in order to reduce a significant backlog. Boeing delivered 137 commercial planes, up 32% from the year-earlier, and edged out Airbus for the most delivered aircraft bragging rights in nearly a decade.
Airbus (a unit of European Aeronautic Defence & Space Co. (EADS)) delivered 131 aircraft, up by 10% from the year before. The companies had both increased production of their medium-haul, more fuel-efficient planes, the Boeing 737 and Airbus A320, in order to meet rising demands in Asia and the Middle East. The increased production by Boeing will help slowly reduce the commercial order backlog, which rose 4.1 percent to a record $305.3 billion as of March 31 from the end of 2011.
Of the 137 aircraft sold by Boeing, 99 were for the 737 MAX next generation plane. The company also delivered six 747-8 stretched jumbos, and five 787 Dreamliners. Boeing intends to deliver 70-85 787 and 747 jets in 2012, with the new Dreamliner accounting for about half. There are 816 Dreamliners currently back-ordered.
Airbus delivered four A380 superjumbos in the first quarter, and began assembly of the new A350, its answer to the 787. The A350 is expected to enter service in 2014.
The two companies are each other's fiercest competition. Together they bring in an estimated $100 billion into the global aircraft market.
While Boeing enjoyed significant increases and profits in the first quarter, and beat Airbus in delivered products, it was Airbus who logged more orders. Airbus brought in 1,419 commercial orders, while Boeing logged only 805. The company booked 412 net orders for commercial airplanes during the quarter, including 301 orders for the MAX. Overall, Boeing said it now has orders to build more than 4,000 commercial planes. Additionally, there are rumors that Boeing may soon see a large order from United Airlines (NYSE: UAL).
Boeing has a lot riding on the success of the 787 Dreamliner. It is a key part of the company's goals to create a more modern and fuel efficient aircraft. It is made from composite materials, and is the first mid-size airplane capable of flying long-range routes. It will allow airlines to create more non-stop, long-range routes, and offer them at a lower cost to passengers over existing routes.
The 787 Dreamliner has suffered a few setbacks on its way to delivery. If the company can fulfill the back-orders and reach demand, the jet has tremendous potential for the company. Until then it is delivery of the 737 MAX that the company must rely on. The 737 MAX features a revamped narrow-body, and a new, fuel-efficient engine, and will enter service in 2014.
The defense, space and security industry side of the business saw revenue increase 11 percent ($742 million) to $8.2 billion. The backlog of military planes grew 20 percent to $72 billion on orders for F-15 fighter jets and C-17 cargo planes. Boeing Military Aircraft first-quarter revenue increased to $4.3 billion, due heavily in part to a contract award for 84 new F-15s for Saudi Arabia. During the quarter, BMA was awarded both domestic and international C-17 Globemaster III orders and delivered the first production P-8A Poseidon aircraft to the U.S. Navy.
Full-year profits for the company will also be helped by money saved for a litigation settlement that will be released.
Overall, things look promising and positive at Boeing. The successful quarter, delivery of the new aircraft, and increased orders, are reasons to celebrate, and continue to invest. The company has proven that its commercial strengths keep it viable and profitable, even in a period when the U.S. government is cutting back, and reducing defense orders.
All things considered, Boeing gets the green light for investors.
ErinAnnie has no positions in the stocks mentioned above. The Motley Fool has no positions in the stocks mentioned above. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.