Bombardier banking on strong final push to meet target
Dec. 2, 2010, Montreal - Bombardier is banking on strong results in the fourth quarter to deliver its aerospace earnings targets for the year, the railway and plane manufacturer said Thursday.
December 2, 2010 By The Canadian Press
"We still feel it is achievable, but it will be very difficult,'' Guy Hachey said during a conference call as it reported weaker than forecasted third-quarter results.
Early signs are showing some improvement, but the market, especially for business jets, has been volatile. A good summer was followed by a weaker fall.
"I felt pretty good in November and I feel pretty good about what we can do in the fourth quarter, I'm just hoping we can string three (months) together,'' Hachey said.
Bombardier also expects some new CRJ1000 will be delivered along with unsold Learjets.
In the third quarter, however, its railway division couldn't totally offset weakness in its aerospace business as its overall profit slipped 15 per cent to US$143 million.
The Montreal-based company, which reports in U.S. dollars, said the profit amounted to eight cents per diluted share in the quarter, compared with $169 million or nine cents last year.
Revenues amounted to $4 billion, down from $4.6 billion a year ago.
The average estimate among analysts polled by Thomson Reuters was for earnings of nine cents per share on revenue of $4.5 billion.
Bombardier Aerospace's revenues fell slightly to $1.8 billion and Bombardier Transportation revenues were $2.2 billion, down from $2.5 billion
"Order levels continued to be strong at $3.7 billion, translating into a record backlog of $32.7 billion, a 21 per cent increase since the beginning of last year,'' chief executive Pierre Beaudoin told analysts.
While Bombardier's rail segment is doing well, the aerospace business is relatively weak right now as companies are waiting to see if they can truly afford to buy corporate jets as they recover from the recession.
"Leading indicators are still sending mixed signals as to the timing of the recovery, however, the fundamentals being strong in the long-term for both business and commercial aircraft,'' Beaudoin said.
Hachey confirmed the company will increase the production rate of its large Global planes next year, but said the smaller business jet market remains challenged.
"Some of our competitors are struggling at that end and they're putting a lot of heat on prices…so I anticipate that continuing next year,'' Hachey said.
He said Bombardier will wait until next year to determine whether production for its regional jets will be reduced and more people will be laid off if new orders can't be achieved.
Benoit Poirier of Desjardins Securities said Bombardier's overall results were below expectations as the solid transportation segment was overshadowed by the challenging aerospace division
Nonetheless, he didn't expect Bombardier's shares will be hurt by the weaker results, given the recent weakness in the stock and the sold transportation results