Boeing Swings to a Profit,
Raises Full-Year Forecast
By ANN KEETON
July 25, 2007 12:40 p.m.
CHICAGO -- Boeing Co. Wednesday reported better-than-expected second-quarter earnings on soaring sales of commercial airplanes, as revenue from defense contracts also rose.
The defense and aerospace giant raised its financial outlook for the full year, but didn't change its forecast for 2008. Boeing also said it is on track to deliver the first 787 Dreamliner in May, although research-and-development costs for the fuel-saving jet -- which has generated more orders than any new aircraft in history -- have risen.
Boeing's 787 Dreamliner plays a starring role in its latest earnings report. The aerospace giant said it'll have to spend more on the jet, but it'll still meet its deadline to have it rolled out by next year.
Shares of the company were up 3.2% at $107.05 in early trading on the New York Stock Exchange, after hitting a fresh 52-week high earlier in the session.
The Chicago company said net income in the second quarter jumped to $1.05 billion, or $1.35 a share, compared with a net loss of $160 million, or 21 cents a share, a year earlier, when the company took charges of $1.07 billion for a Justice Department settlement for defense contracting, and delays on foreign military contracts. Revenue in the latest period was $17.03 billion, up 14%.
The mean estimate of analysts polled by Thomson Financial was for earnings of $1.16 a share on revenue of $16.2 billion.
"Our results and increased outlook reflect strong markets, preferred products and services and a focus on execution, growth and productivity," said Chairman and Chief Executive Jim McNerney. "Our extensive productivity gains enable us to invest to protect key growth programs while still improving our financial performance."
Higher Spending on 787
The company expects higher-than-projected spending on research and development, due largely to the 787 Dreamliner, but Boeing anticipates that costs will be more than offset by growth and productivity gains.
R&D spending for 2007 is now projected to be $3.7 billion, up from a previous forecast of $3.2 billion to $3.4 billion. The company pegs 2008 R&D spending at $2.8 billion to $3 billion, though it warned "certain development program challenges could push spending above that range."
"While the risks inherent in the latter stages of major airplane development programs remain," the company said the Dreamliner should make its inaugural flight by the end of September, with the first delivery to a customer on schedule for May.
Analysts have been watching the timetable for any possible delays, as has rival Airbus with its soon-to-be-delivered A380 jumbo plane. Boeing's lightweight jet, the first to have a body and wings made of composite materials, rather than aluminum, is expected to save at least 20% on fuel, with long-range flight capability.
From WSJ, Boeing Swings to a Profit, Raises Full-Year Forecast (subscription required)
First flight for 787 by the end of September.