Boeing boosts 2013 forecast as Q3 profit soars

Boeing raised its 2013 earnings forecast Wednesday after third-quarter profits soared, saying it would boost production of its flagship 787 Dreamliner aircraft.

Net earnings totalled US$1.16 billion for the July-September quarter, an increase of 12 per cent from US$1.03 billion in the same period in 2012, the US aerospace and defence giant said.

Earnings per share came in at US$1.51 compared with US$1.35 a year ago.

Adjusted earnings per share, excluding certain pension expenses, increased 16 per cent to US$1.80, well above Wall Street analysts' average estimate of US$1.55.

Revenues also beat expectations, rising 11 per cent to US$22.13 billion, reflecting higher commercial airplane deliveries.

"Consistently strong operating performance is driving higher earnings, revenue and cash flow as we deliver on our record backlog and return increased value to shareholders," said Jim McNerney, Boeing's chairman, president and chief executive.

Boeing raised its 2013 core earnings outlook to a range of between US$6.50 and US$6.65 per share, from the prior estimate of US$6.20-US$6.40 range. It maintained its revenue forecast of US$83-86 billion.

Investors cheered, pushing Boeing shares to new all-time highs despite an overall lower market. The Dow component's stock was up 4.9 per cent at US$128.44 in late-afternoon New York trade, after climbing as high as US$129.99.

In the year to date, Boeing shares have spiked about 60 per cent, after trading steadily in the US$70 range in 2012.

Boeing said it expected to deliver 635 to 645 new commercial aircraft in the year, including more than sixty 787s, at an operating margin revised to above 10 per cent, an increase of a half percentage point.

The Chicago-based company, which employs more than 170,000 people in the US and in 70 countries, said it had third-quarter operating cash flow before voluntary pension contributions of US$4.31 billion, up from US$2.35 billion a year ago.

It also had a record US$415 billion order backlog, including US$27 billion net orders booked during the quarter.

Third-quarter profits from its Commercial Airplanes subsidiary soared 40 per cent to US$1.62 billion, while revenues rose 15 per cent to US$13.99 billion.

Despite technical glitches that have plagued Boeing's new 787 Dreamliner , the company reported "continued strong demand" for its cutting-edge plane, which entered service two years ago.

The company said it planned to increase its 787 production rate for 2016 to 12 airplanes per month from 10, and would raise that 14 airplanes per month before the end of the decade.

But McNerney, in a conference call with analysts, expressed dissatisfaction with the 787's performance.

"Improving dispatch reliability of the 787 is at the top of our priorities," he said, referring to the ratio of the number of flights delayed because of technical problems to the total number of flights.

Boeing booked 200 net aircraft orders in the third quarter. Deliveries accelerated to 170 airplanes from 149 a year ago, as the pace of 787 deliveries nearly doubled.

Commercial Airplanes had a backlog of nearly 4,800 airplanes valued at US$345 billion.

Headwinds from US cutbacks in defence spending amid a protracted Washington budget battle that forced sharp "sequestration" automatic cutbacks beginning in March appeared to impact Boeing's Defence, Space & Security subsidiary.

Profits in the smaller defence unit fell 19 per cent to US$673 million, led by a 48 per cent fall in earnings from military aircraft. Boeing said that its military aircraft unit's operating margin fell 6.2 per cent, in part reflecting one-time charges on the F-15 and C-17 programs.

The Defence unit had an order backlog of US$70 billion, with 38 per cent of that representing orders from international customers.

"Despite the uncertainty of the US defence market, overall our customer-focused business strategies and disciplined execution on our programs are producing the results we expect, McNerney said.

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