Bombardier Surges Most Since 2008 as Profit Beats Estimates on Jet Demand
Bombardier Inc. (BBD/B) jumped the most since November 2008 in Toronto trading after quarterly profit beat analysts’ estimates as the company won business-jet orders and pared inventory.
Net income increased 80 percent to $318 million in the fourth quarter ended Jan. 31, Montreal-based Bombardier said today in a statement. Profit of 18 cents a share beat the 11- cent average estimate of 20 analysts surveyed by Bloomberg.
Demand is rising for bigger models at the world’s third- biggest planemaker as corporate profits recover. Bombardier won its largest aircraft order this month when business-jet operator NetJets Inc. agreed to buy as many as 120 aircraft to prepare for a rebound in luxury travel. Bombardier generated free cash flow of $605 million for the fiscal year.
“We had expected Bombardier to report positive free cash flow and the result was even better due to strong orders at both Bombardier Aerospace and Bombardier Transportation,” Fadi Chamoun, an analyst with BMO Capital Markets, said in a research note. Chamoun rates the shares “outperform.”
Bombardier rose 83 Canadian cents, or 13 percent, to C$7.13 on the Toronto Stock Exchange. It was the biggest advance since Nov. 21, 2008, and pushed the shares to the highest since Sept. 12 of that year, before the global financial crisis.
Embraer SA (EMBR3), a Brazilian planemaker that competes against Bombardier, said last week that fourth-quarter profit surged 26 percent on higher plane deliveries.
Sales at Bombardier’s aerospace unit rose to $2.9 billion from $2.7 billion. Revenue at the transportation unit, which makes subway cars and locomotives, fell to $2.5 billion from $2.7 billion.
Bombardier’s total order backlog swelled to $50.1 billion on Jan. 31. The company said Feb. 17 that it would deliver about the same number of aircraft from February through December this year as it did in the 12 months of fiscal 2011 -- about 240 planes -- as it begins to report on a calendar-year basis. The mix of deliveries will shift in favor of business jets, the company said.
“Bombardier has had a few recent positive surprises, and incremental order activity from here could keep it going,” Noah Poponak, a Goldman Sachs analyst, wrote in a March 3 note after the NetJets order announcement. He has a “neutral” rating on the stock.
The company expects to have 300 orders for the new CSeries commercial airliner, up from 90 now, by the time the 110-seat jet goes into service in 2013, Gary Scott, who runs the commercial aerospace division, said earlier this month.
The aerospace unit’s order backlog reached $16.6 billion on Jan. 31, a similar level to a year earlier, Bombardier said today.
“This is mainly due to an order received for the CSeries family of aircraft, offset by a lower order backlog for regional jets, turboprops and business aircraft,” the company said in the statement.
Bombardier is the third-biggest planemaker behind Airbus and Boeing Co.