BOEING YESTERDAY raised its earnings guidance for 2012 after a strong performance by its commercial aircraft division in the second quarter.
The US manufacturer’s results for the three months to June 30th exceeded analysts’ expectations, as 150 passenger jets were supplied to customers, compared to 118 during the same time last year.
The results will provide some relief for investors, who are increasingly concerned that the order cycle for passenger jets may be peaking.
Boeing raised its earnings per share guidance for 2012 to between $4.40 and $4.60, compared to a previous range of $4.15 to $4.35.
“Commercial aeroplane deliveries increased 27 per cent in the second quarter, and our defence, space and security business also produced higher revenues and strong margins in a difficult market environment,” said Jim McNerney, Boeing’s chief executive, referring to how the company’s defence business is contending with reduced spending by western governments.
The US manufacturer supplied 65 military aircraft to customers in the second quarter, compared to 57 during the same period last year. Among the 150 passenger jets delivered to airlines and leasing companies were six Dreamliners – Boeing’s next generation widebody aircraft.
Although deliveries of the 787 are boosting Boeing’s revenue, they are having a negative effect on the commercial aircraft division’s operating margin because the costs of producing the jet are higher at the beginning of the programme. Investors are keen to hear reassurances that Boeing is on track to increase production of the 787 from 3.5 per month to 10 by late 2013, and Mr McNerney said this month that the plan was challenging but realistic.
Boeing reported revenue of $20 billion for the second quarter, up 21 per cent on the same period last year, and operating earnings of $1.5 billion, up 1 per cent.
Net income rose 3 per cent to $967 million, resulting in earnings per share of $1.27, up 2 per cent.
But free cash flow fell 56 per cent to $552 million in the second quarter because of higher contributions into Boeing’s pension scheme.