Bombardier Inc reported a better-than-expected 31 percent rise in third-quarter profit helped by higher aircraft deliveries to customers, lifting its shares more than 4 percent.
The company, the world’s third biggest commercial planemaker, said that economic uncertainty in the United States and Europe was still hurting demand for its commercial jets but it did not announce any new production cuts.
Demand for its larger-sized business jets, such as its Challenger and Global brands, remained strong although appetite for the smaller Learjets continued to be soft, Reuters reports.
It also said its all-new C-Series commercial jetliner was on track to meet its promised entry into service date of 2013. There has been growing doubt in the market that the single-aisle 110- to 149-seater plane, Bombardier’s biggest, will meet its launch date.
“The aerospace side was definitely better than my estimates… Maybe the market was fearing much worse and just the fact that it didn’t turn out that way, we are getting a bit of a relief rally out of it,” Canaccord-Genuity analyst David Tyerman said.
By mid-afternoon, Bombardier’s stock was up 4.5 percent at C$3.95 on the Toronto Stock Exchange. The stock is down 21 percent this year partly on worries about flagging commercial aircraft sales.
Bombardier, which is also the world’s largest trainmaker, again burned through more cash in the quarter than the market expected, although it forecast a turnaround to positive cashflow in the fourth quarter.
Free-cashflow usage more than tripled to $346 million in the three months, with some of the drain coming from the company’s rail unit as inventories built up there due to delays caused by safety approval bottlenecks on several large contracts in Europe.
Train deliveries had, however, already restarted in France and Sweden and a resumption in Germany was imminent, Bombardier Chief Executive Pierre Beaudoin said on a conference call.
RESULTS BEAT EXPECTATIONS
Bombardier reported a third-quarter net profit of $192 million, or 11 cents a share, up from $147 million, or 8 cents a share, a year ago. That was above the 10 cents a share analysts on average had expected, according to Thomson Reuters I/B/E/S.
Revenue rose 16 percent to $4.62 billion, also higher than the market expected.
Revenue at its aerospace division, which manufactures business, commercial and amphibious aircraft, was up 28 percent at $2.3 billion.
The group delivered 68 aircraft in the quarter, up from 51 in the same period in 2010. It received 34 net orders during the third quarter – 30 for business jets, but just four for commercial aircraft.
Even so, the company did not announce further production cuts for its CRJ or Q400 fleet and hinted there could be more orders to come. It announced output reductions at both earlier this year.
“We have made our plans for next year and we have nothing to announce in terms of production. We feel good about next year’s production,” Beaudoin said.
Revenue at Bombardier’s transportation division, which houses its train operations, rose 5 percent to $2.3 billion.
C-SERIES ON TRACK
Beaudoin said Bombardier was comfortable with the 133 firm orders for its new C-Series aircraft two years ahead of its launch date and did not feel it had to make “huge compromises” to win business.
“There will be more announcements, but we think we are in a good position at this stage,” he said.
Morningstar analyst Neal Dihora said he was hopeful that the margins on sales of the C-Series would be higher than for Bombardier’s other commercial planes.
“I don’t think they are bending on price as much as they could,” Dihora said.
Orders for the C-Series have been slower than industry watchers would have liked and stopped altogether in the 16 months until June this year.
Bombardier also announced that its financial year-end will change to December 31 from January 31, effective December 31 2011.