(FILES) This file photo taken on June 18, 2017 shows the Boeing logo on the fuselage of a Boeing 787-10 Dreamliner test plane presented on the Tarmac of Le Bourget on the eve of the opening of the International Paris Air Show. Boeing reported better-than-expected quarterly earnings on July 26, 2017 and lifted its full-year profit forecast, citing a strong operational performance and tax savings not anticipated earlier in the year. Net income in the second quarter was $1.8 billion, up from the $234 million loss in the year-ago period due to one-time costs on its military and commercial aircraft programs. / AFP PHOTO / ERIC PIERMONT
NEW YORK: Boeing Co shares soared more than 8% to a record high after the world’s biggest plane maker posted second-quarter profit and cash flow well ahead of Wall Street estimates and lifted its full-year forecasts, helped by aggressive cost cutting.
Boeing has cut spending by streamlining production, reducing payrolls and winding down development costs, which has dramatically improved profit and cash flow. Its 787 Dreamliner contributed about US$530mil (RM2.27bil) in cash in the quarter, the second-largest amount in the history of the programme.
Boeing shares jumped 8.2% to US$229.89 in early trading. The stock has soared 37% this year.
The company’s cash from operations, at nearly US$5bil (RM21.42bil) in the quarter, was roughly double estimates of about US$2.5bil.
“Monster cash flow,” said analyst Robert Stallard at Vertical Research. The results were ”about as close to perfect as it gets from Boeing,” he added.
Military aircraft sales fell 4% to US$6.8bil (RM29.14bil), but profit jumped 50% and margins widened 4.6 percentage points, another sign of cost-cutting.
Boeing now needs to keep speeding up production of 737s and stay on schedule with 787-9 and 787-10 production and the transition to the 777X, a replacement for its 777 jetliner, said Ken Herbert, an analyst at Canaccord Genuity.
The extra cash allowed Boeing to add US$1.5bil to its 2017 operating cash flow forecast, now about US$12.25bil.
Boeing will increase share buybacks this year by US$3.5bil, to about US$10bil. And it will make US$3.5bil in additional pension contributions this year to reduce future costs.
Boeing said it will cut full-year capital expenditure by US$300mil, but that was expected since the company has made most of the big investments in its 777X wing factory and the 737 MAX and 787-10 programmes, said analyst Richard Aboulafia at Teal Group.
The company lifted its full-year forecast for core earnings, which exclude some pension costs, by 75 cents to between US$11.10 and US$11.30 a share, its second upward revision this year.
Boeing swung to a profit of US$1.76bil (RM7.54bil), or US$2.89 per share, in the second quarter, from a loss of US$234mil (RM1.0bil), or 37 cents per share, a year earlier that reflected charges related to the 787, 747 and KC-46 tanker aircraft programmes.
Core earnings, which excluded some pension and other costs, were US$2.55 per share in the quarter.
Revenue fell 8.1% to US$22.74bil (RM97.43bil).
Analysts expected core earnings of US$2.30 per share on revenue of US$23bil, according to Thomson Reuters I/B/E/S. - Reuters
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