Boeing reports jump in first quarter profits on strong defense volume

Boeing reported a surge in first-quarter profits on Wednesday and lifted its full-year earnings forecast following a strong performance in commercial aviation and defense programs.

The U.S. aerospace giant reported earnings of $2.5 billion, up 56.9 percent from the year-ago period. Revenues rose 6.5 percent to $23.4 billion.

Defense, Space & Security first-quarter revenue increased to $5.8 billion driven by the C-17 Globemaster III transport plane, international fighters and weapons volume. First-quarter operating margin increased to 11.3 percent on solid execution and mix.

Backlog was $50 billion, of which 36 percent represents international orders.

During the quarter, Boeing was awarded an initial contract for 28 F/A-18 Super Hornets for Kuwait, a contract for the final C-17 for India, and an extension for Ground-based Midcourse Defense development and sustainment from the Missile Defense Agency.

A big player in China, Boeing has often been seen as vulnerable to a trade war between the United States and China, a possibility that topped Wall Street’s list of worries earlier this month but has receded of late amid softer rhetoric between Washington and Beijing.

Tanker project’s possible delays

Earnings in Boeing’s defense division were lifted by strong weapons volume. Boeing won new business from Kuwait and said it was making progress on the KC-46 tanker program, a U.S. Air Force transport aircraft contract that has led to unexpected cost increases in prior quarters.

Boeing said on Wednesday that it continued to progress of the KC-46 development program, which completed its fuel on-load certification testing this quarter.

A report earlier this month by the U.S. Government Accountability Office warned that deliveries of the first fully capable KC-46 tankers could slip to May 2019 from the current timetable of October 2018, citing a number of risks to the timeframe that need to be mitigated.

These including the need to speed up flight tests and update the timetable for certifying aircraft “to reflect a more realistic schedule.”

Other key questions surrounding Boeing include the status of talks with Brazilian company Embraer on a potential collaboration that must be blessed by the Brazilian government.

Boeing also could be impacted if President Donald Trump scotches the nuclear agreement between Iran and major governments that opened the door to commercial plane sales in the sanctions-constrained country.

Boeing confirmed its full-year revenue forecast, but lifted full-year forecast earnings range from $13.80 to $14.00 per share to $14.30 to $14.50 per share, excluding pension costs.

“Our team’s strong first-quarter performance, combined with the positive market outlook across our businesses and our confidence in executing on our production and development programs, gives us a solid foundation to raise our guidance for the year,” said Chief Executive Dennis Muilenburg.

With reporting from AFP


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