Bombardier Inc., the world’s third- largest commercial planemaker that posted a 27 percent drop in second-quarter profit, said its aerospace unit is seeing “signs of recovery” as fewer airlines cancel orders.
Net income dropped to $148 million, or 8 cents a share, in the three months ended July 31, from $202 million, or 11 cents, a year earlier, the Montreal-based company said in a statement today. Earnings met the 8-cent average of 14 analysts’ estimates compiled by Bloomberg, while sales came in lower than expected.
Chief Executive Officer Pierre Beaudoin has cut jobs and output in the past two years as sales slowed. Free cash flow, or cash left after expenses and investments, was lower than expected by some analysts including Walter Spracklin at Toronto- based RBC Dominion Securities Inc. and Benoit Poirier at Desjardins Securities Inc. in Montreal.
“You should see aircraft production numbers up significantly in the second half,” said Nick Heymann, an analyst with Sterne Agee & Leach Inc. in New York who has a “buy” rating on Bombardier.
Beaudoin said today on a conference call with analysts that the company would “catch up” to its neutral cash-flow forecast in the second half of this year. He said the aerospace unit is seeing “signs of recovery” as fewer airlines cancel orders.
Heymann said the chief executive’s remarks were “a kind of confirmation that there’s no more negative news.”
Bombardier’s total order backlog jumped to $47.4 billion on July 31 from $44.4 billion on April 30 and $43.8 billion on Jan. 31, Bombardier said.
Sales at the aerospace unit fell to $2 billion from $2.4 billion a year earlier, while revenue at the transportation unit declined to $2.1 billion from $2.5 billion, Bombardier said. New orders at the transportation unit rose to $4.3 billion from $3 billion a year earlier, the company said.
Guy Hachey, president of the aerospace unit, said at the Farnborough Air Show in July that some prospective buyers for the CSeries jet, which aims to compete in the single-aisle market with larger planemakers Airbus SAS and Boeing Co., were waiting for more signs of rebounding economies and an ability to get financing before placing orders.
Louis Chenevert, CEO of United Technologies Corp., which owns Pratt & Whitney, the engine maker with the sole power plant on the CSeries, said during a Webcast presentation today that Bombardier has a “full pipeline” of potential CSeries customers and expects order announcements by year-end.
Total sales fell about 18 percent to $4.08 billion in the quarter, Bombardier said, compared with analysts’ average estimate of $4.52 billion. Revenue in 2011 may be below 2010, with fewer regional- and business-jet deliveries, Beaudoin said in June.
Bombardier rose 16 cents, or 3.6 percent, to C$4.60 in Toronto trading at 4 p.m.