Bombardier Profit Slides on Sluggish Demand for Business, Commercial Jets
Bombardier Inc., the world’s third- biggest planemaker, said quarterly profit slid 16 percent amid sluggish demand for commercial and business jets.
Net income through Oct. 31 dropped to $141 million, or 8 cents a share, from $167 million, or 9 cents, a year earlier, Montreal-based Bombardier said today in a statement. Earnings trailed the 9-cent average of 19 analysts’ estimates compiled by Bloomberg. Sales fell 13 percent to $4 billion, below the average projection of $4.5 billion.
Chief Executive Officer Pierre Beaudoin is seeking buyers for the 110-seat CSeries aircraft and adding two new business jets as he works to build the order book. Bombardier said yesterday that bigger rival Airbus SAS’s decision to add new engines to its A320 probably won’t hurt CSeries sales.
“In aerospace, leading indicators are still sending mixed signals as to the timing of the recovery,” Beaudoin said on a conference call with analysts today. “However, the fundamentals are strong in the long-term for both business and commercial aircraft, and Bombardier Aerospace continues to invest in its product development.”
Bombardier fell 12 cents, or 2.5 percent, to C$4.65 at 11:18 a.m. in Toronto Stock Exchange trading. The shares earlier dropped as much as 4.8 percent, the biggest intraday decline since Nov. 15.
Bombardier’s total order backlog was at $48.9 billion on Oct. 31, up from $47.4 billion on July 31.
Sales at the aerospace unit fell to $1.8 billion from $2.1 billion. Revenue at the transportation unit, which makes subway cars and locomotives, dropped to $2.2 billion from $2.5 billion.
The aerospace group won 23 net orders in the quarter compared with seven a year earlier. Those figures include cancellations of earlier orders. The group delivered 53 planes from 61 last year. The backlog, at $16.2 billion as of Oct. 31, is down from $16.7 billion as of Jan. 31.
Gary Scott, who runs Bombardier’s commercial aerospace division, said in an interview yesterday that Bombardier remains in advanced discussions with a handful of customers for the CSeries jet, which aims to compete in the smaller portion of the single-aisle market with Airbus and Boeing Co. He declined to say whether any orders would be announced by year-end.
Economic conditions are the main driver of airline choices, and airlines are in a “much better mood,” Scott said.
Earnings will probably improve as Bombardier’s aerospace unit benefits from initial deliveries of the CRJ 1000 regional jet in the quarter ending in January, Nick Heymann, a New York- based analyst with Sterne Agee & Leach, wrote in a note to investors today. He has a “buy” rating on the shares.
“A critical factor will be additional C-Series orders, which we continue to believe will be forthcoming over the next two to three quarters,” he wrote.
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