Boeing said it expects flat to slightly lower 2016 revenues and core earnings
New York - AFP
Boeing warned Wednesday that company revenues and aircraft deliveries could fall in 2016 and forecast profits well below what analysts were expecting after a fourth quarter slowdown last year.
Shares of the aerospace giant fell a sharp 9.6 percent to $115.68 after it projected 2016 commercial aircraft deliveries of between 740 and 745, down from 762 in 2015 and the first decline since 2010.
Boeing said it expects flat to slightly lower 2016 revenues and core earnings per share of $8.15-$8.35, well below the $9.43 expected by Wall Street analysts.
Boeing offered little elaboration on the weaker outlook, saying global growth "continues at a moderate pace" with the commercial airline business a profitable "long-term growth industry."
"With clear strategies and strong positions in our markets, a large and diverse order backlog worth nearly $500 billion, and multiple additional production rate increases planned yet this decade, we are well positioned for profitable growth and higher cash flow as we move into our second century in business," Boeing chief executive Dennis Muilenburg said.
But the weak outlook for deliveries threatens to erode Boeing's advantage over rival Airbus, which said on January 12 that it expects 2016 deliveries to rise to 650 aircraft from 635 in 2015. Airbus reported a substantial edge in net orders last year, 1,036 for the European maker versus 768 for Boeing.
Barclays said in a note that the disappointing outlook likely reflects higher expenses and research and development costs, as well as slowing production of its the profitable 737 midrange aircraft.
Deliveries of the 737 were down to 120 in the fourth quarter from 126 in the third quarter, according to Boeing's results.
The "737 lull in production wasn't really signaled," said Barclays, adding that it expects Boeing shares to "sell off hard."
The outlook comes on the heels of Boeing's announcement January 21 that it was cutting production of the 747-8 freighter due to falling demand in the air cargo market.
Boeing said it was trimming output of the cargo planes by half to one plane every two months. It also took a $569 million charge against fourth-quarter earnings.
There has also been speculation Boeing will slow production of its long-range 777 aircraft. The Seattle Times, citing an unnamed executive with a Boeing customer, reported that Boeing was expected Wednesday to announce the 777 cutback on Wednesday.
Boeing said fourth-quarter net income was $1.0 billion, down 30 percent from the year-ago period. Sales fell 3.7 percent to $23.6 billion.
Commercial deliveries for 2015 came in at a record 762 aircraft, but net orders for new commercial aircraft dropped to 768 last year from 1,432 in 2014.