Bombardier income soars
March 31, 2011, Montreal - Bombardier reported a big increase in fourth-quarter net earnings Thursday, easily exceeding analyst expectations even though revenue at the Quebec-based transportation giant remained relatively flat.
March 31, 2011 By The Canadian Press
The company, which reports in U.S. dollars, said it earned net income of US$325 million or 18 cents per share, in the three months ended Jan. 31. That compared with net income of US$179 million or 10 cents a share a year ago.
Revenue was nearly unchanged at $5.37 billion compared with $5.35 billion in the year-earlier quarter.
For the full year, Bombardier said it made US$769 million, or 42 cents per share, compared with US$707 million or 39 cents the previous year, although full-year revenue was down at US$17.7 billion from US$19.4 billion.
Analysts had expected that Bombardier's adjusted earnings for the quarter would increase just one cent to 11 cents per share on US$5.25 billion of revenues.
For the year, they forecast 35 cents of EPS, down from 39 cents a year earlier on US$17.7 billion of revenues.
"This past year has been challenging yet positive,'' president and CEO Pierre Beaudoin said in a release.
"Our efforts to lean out our cost structure combined with our continued focus on operational excellence have enabled us to
increase our profitability despite this year's reduction in revenues.''
"Both groups (Aerospace and Transportation) have also done an excellent job in managing their working capital which resulted in free cash flow generation of $605 million compared to a negative amount last year.''
Beaudoin said the Aerospace Division appeared to have turned the corner with business jet orders picking up substantially in the fourth quarter.
"To further strengthen our product leadership position, we continued to make progress on the development of new products within our business and commercial aircraft segments, both of which have healthy long-term growth prospects,'' Beaudoin said.
"Transportation delivered a strong performance in fiscal year 2011,'' he added. "… Our highest level of new orders ever brought our backlog to a record level of $33.5 billion at the end of the year. This is a testimony to our strategy of developing innovative products that meet customer needs globally.''
Besides the results, industry analysts were eagerly awaiting the company's aerospace profit margin guidance for fiscal 2012.
Benoit Poirier of Desjardins Securities said he expected the world's third-largest aircraft manufacturer would seek to achieve 10 to 12 per cent margin within three years.
He forecast that the railway division's margins would be 5.3 per cent in fiscal 2012 and 6.8 per cent the following year.
Bombardier's shares have gained 26 per cent so far this year. But Poirier believes they can reach $8 within a year because of the continuing improvement of the business jet market and potential CSeries orders.
Meanwhile, he said the transportation segment's market share appeared to be growing as French rival Alstom's transport bookings fell by 32 per cent last year, forcing it to lay off 1,400 employees.
Turan Quettawala of Scotia Bank said Brazilian rival Embraer's plan to go after 15 per cent share of the business jet market is negative for Bombardier's Learjet and Challenger planes.
Bombardier's plane and train divisions employ about 65,000 people around the world.