Bombardier expects revenues to soar in five years
Dec. 6, 2011, Montreal - Airplane and train maker Bombardier Inc. expects to nearly double its revenues and boost its profit margins in five years, once it completes major new development projects and expands sales to emerging markets.
December 6, 2011 By The Canadian Press
The Montreal-based company told analysts Tuesday it hopes to add between US$10 billion and $16 billion of revenues to its current base of $18 billion.
The company is investing heavily, primarily in new business and commercial planes. The investments should deliver $8 billion to $12 billion a year in additional revenues, including up to $8 billion from the CSeries, included related services.
The lightweight composite CSeries and Learjet 85 planes are slated to enter into service the end of 2013.
Aerospace CEO Guy Hachey said he continues to expect the 110- to 149-seat CSeries will be delivered on schedule despite the technological challenges of introducing a new plane.
Its production slots are filled for 2014, 2015 and three-quarters of 2016.
Even though sales are slower than some industry observers had forecast, Bombardier president Pierre Beaudoin told a New York investor day that the project is well-positioned to deliver maximum returns to investors.
The new Global 7000 and 8000 planes are forecasted to generate US$1.5 billion to US$2 billion in annual revenues. The Learjet 85 should capture up to US$1.5 billion in extra revenues per year.
Bombardier has selectively pursued orders that help get the program off the ground and minimize discounts that would eat away at profits.
The company sees opportunities to increase its profit margin from both aerospace and transportation as sales increase.
Over the next decade, 40 per cent of its business jets will be delivered outside of Europe and the United States, representing 400 additional units per year.
Bombardier is also expanding its sales force to help win some of the contracts that have been secured by regional aircraft rivals Embraer and ATR.
It said China will continue to be a key market for both products, but India should increasingly order planes and trains.
By 2016, annual revenues to emerging countries could double to US$4 billion a year. Over the past five years, revenues from so-called BRIC countries (Brazil, Russia, India and China) have grown by 47 per cent annually.