Boeing Reports Results

Boeing today reported its first quarter results for 2008.

In summary:

• First-quarter EPS grew 43 percent to $1.62 per share as net income rose 38 percent to $1.2 billion
• Operating margin expanded to 11.3 percent as revenue rose to $16.0 billion
• Operating cash flow more than doubled to $1.9 billion
• Backlog reached a record $346 billion
• 2008 EPS guidance reaffirmed at between $5.70 and $5.85 per share
• 2009 EPS expected to grow approximately 20 percent to between $6.80 and $7.00 per share

Of key importance in Boeing’s press release today was the 2009 earnings guidance in lieu of the 787 Dreamliner being delayed for a third time.

Image courtesy of Boeing

“We are methodically working through our challenges, including the start-up of the 787, and our people remain focused on satisfying our customers and leveraging growth and productivity into better bottom-line and top-line performance for our company,” said Chairman, President and Chief Executive Officer Jim McNerney.

Even working on a minimal/nominal figure, Boeing is still upbeat and anticipates 2009 earnings per share to be almost $1 more than 2008, ranging between $6.80 and $7.00 per share. Looking forward, the company envisages a more robust production program - particularly the 787, 747 and 777.

With key models such as the 777F and 747-8 family coming on stream, R&D expenditure will fall, further buffering and increasing the financial warchest.

As noted before, despite the 787 being delayed, the 777 is the most likely airplane to benefit from increased sales.

Whether these are discounted or form part of compensation deals for 787 customers is unclear, but what is clear is that Boeing will likely increase 777 production within 12 months to facilitate the extra demand for the most fuel efficient twin engine airplane jet family that the market has.

One need only refer to the deal announced with Biman Bangladesh Airlines for 777-300ER’s and 787’s. Biman will start taking delivery of its 777-300ER’s in 2013, despite the A350 entering service that year.

My colleague, Richard Aboulafia had noted that “the [777] is a proven performer, and despite the limited short-term slots, airlines can get a plane in a few years.“

While the earnings figures can be crunched in any number of ways, the outlook is certainly bright for Boeing and its products.

3 comments April 23rd, 2008