The Boeing Co. Wednesday posted a $787 million second-quarter profit that beat Wall Street expectations but fell 21 percent short of last year's second-quarter results.
Profit amounted to $1.06 a share. Wall Street analysts on average had predicted a profit of $1.01.
Attribute the shortfall to fewer aircraft deliveries in the commercial aircraft business and lower Network and Space Systems revenues in the military segment of Boeing’s operation .
Revenues for the company declined 9 percent to $15.573 billion.
Delays in delivering the company’s new 787 and 747-8 aircraft plus a temporary decline in demand has affected deliveries in the first half of the year. Boeing, for instance, delivered 9 percent fewer airliners (114) than in the second quarter of 2009 (125).
The company is building the new 787 Dreamliners and 747-8s but can’t deliver them until both planes successfully pass flight tests. That translates to higher costs for production. But there’s no income yet on those two aircraft because there were no deliveries in the first half of the year.
First deliveries of the 787 Dream-liner and the new 747-8, now set for late this year, might slip into early 2011 because of test issues, Boeing C hief E xecutive Officer Jim McNerney said.
Meanwhile, production of Boeing cash cow – the 777 twinjet – is slowing to five deliveries a month from seven, a development that will further pinch profits.
But in the longer term, Boeing prospects are looking better, the company said. The company’s commercial airplane division recorded 68 net orders during the second quarter, compared with just five during the second quarter last year.
Both passenger and air freight traffic is reviving sooner than expected, McNerney said, pumping up demand.
And the company has scheduled production pace increases for its 737, 747 and 777 assembly lines in Renton and Everett.
Further production increases will depend not so much on demand, but on the ability of suppliers to speed up parts production, McNerney said.
“That to me is the sign of … a first year of a multiyear up- cycle,” said Alex Hamilton, an analyst for C.K. Cooper & Co.
“That underscores that a recover is underway,” he told Thomson Reuters.
With tighter defense budgets worldwide, Boeing could trim costs by laying off some defense division workers as needed, McNerney said.
Both the commercial airplane and defense business could get a boost later this year if the U.S. Air Force selects Boeing to provide its next generation aerial tanker.
The company’s aircraft financing business, Boeing Capital Corp., however, reported a more robust quarter with $55 million in pre tax earnings compared with $36 million in the same quarter last year.
Revenues are predicted to be $64 billion to $66 billion. Earnings are expected to be in the range of $3.50 to $3.80 a share.
Commercial airplane deliveries are expected to be between 460 and 465 planes for the year.