Bombardier Disappoints, New Learjet Delayed
Bombardier on Thursday reported quarterly results that fell short of expectations, sending its shares down 9 percent.
The company added to investors' disappointment by announcing it was pushing back the first delivery of its Learjet 85 business aircraft to the summer of 2014 from its previous target of late 2013.
Before Thursday's pullback, Bombardier stock had jumped 37 percent since late November when the company signed a record USD$7.8 billion deal with Swiss charter operator VistaJet. On Wednesday, it won a deal that could be worth up to USD$3.42 billion for its new C-Series commercial jets.
But the Montreal-based company's fourth-quarter profit tumbled 93 percent, pulled lower by charges for a plant closure and job cuts in its rail division. Margins slumped, partly on lower revenue from China and higher costs per unit sales.
For Bombardier Aerospace, it expects margins on earnings before financing expenses, financing income and income taxes (EBIT) - a closely watched performance measure - to be little changed in 2013 at about 5 percent and rise to about 6 percent in 2014.
Bombardier's total order backlog rose to a record USD$66.6 billion at the end of 2012 from USD$55.8 billion at the end of 2011. That includes orders for its new C-Series jet.
In aerospace, the company plans to deliver about 190 business and 55 commercial aircraft. The company, the world's No. 4 commercial plane maker, delivered a total of 233 planes last year.
Bombardier competes with Brazil's Embraer in the smaller passenger-aircraft business. It aims to capture some of the larger end of that market, now dominated by Airbus and Boeing, with its 100-149 seat C-series plane.
LEARJET LAUNCH DELAY
Bombardier said the revised timetable for the new Learjet reflected technology problems that have been resolved.
In a conference call with analysts on Thursday, it expressed confidence that the first flight of the new C-Series - its ticket into the larger commercial jet market - would take place by the end of June.
Last November, it said it was delaying the first flight by six months to June because of unspecified supplier delays.
The shares rose more than 4 percent on Wednesday, after it said it won an order to sell up to 42 of the C-Series airliners to Russia's Ilyushin Finance in a deal that could be USD$3.42 billion.
Indeed, Bombardier executives said the company was at a "turning point" and that it was "on the cusp of seeing significant revenue growth."
At least one analyst upgraded his rating on Thursday. Cameron Doerksen at National Bank Financial said the focus will now shift to stronger results in 2014 and beyond, despite the disappointing quarterly results and 2013 guidance.
The company, which reports in US dollars, said net profit in the fourth quarter fell to USD$14 million from USD$214 million a year earlier.
Bombardier took a restructuring charge of USD$119 million related to the 1,200 job cuts in its rail unit and the closure of a freight car plant in Germany.
A temporary drop in revenue from China, traditionally a strong market for the company, also held back the results, but executives said revenue had returned to normal and they were expecting a significant increase in business from China in 2013.
On an adjusted basis, net income fell to USD$188 million, from USD$227 million a year earlier.
Fourth-quarter EBIT was USD$175 million, or 3.7 percent of revenues, compared to USD$293 million, or 6.8 percent, for the same period a year earlier.
Revenue rose nearly 12 percent to USD$4.8 billion. Revenue in the aerospace unit, which makes business, commercial and amphibious craft, rose 30 percent to USD$2.6 billion. Revenue in the transportation unit fell 4 percent to USD$2.2 billion.