Boeing Co. published a Q4 profit that beat analysts’ estimates and predicted that it would make good in 2015 in converting a record jetliner-order backlog into cash, Bloomberg reported. The company's shares jumped in early trading.
The quarterly profit excluding pension expense was $2.31 a share, Chicago-based Boeing said Wednesday. Free cash flow this year will be about $6.2 billion, according to the company.
Market players have been expecting to see Boeing start generating more cash from its plane orders and stem losses on the 787 Dreamliner which entered commercial service in 2011, more than three years late. The jetliner is the first built of composites rather than the traditional aluminum.
“Progress on 787 costs is critical, as it will be the single biggest driver of additional free cash flow,” Douglas Harned, a New York-based analyst with Sanford C. Bernstein & Co., said in a Jan. 26 report.
Deferred production costs for the 787 rose to $26.1 billion during the fourth quarter from $25.2 billion in the previous three months, Boeing said on its website. But as the assembly expense declines amid a projected increase in efficiency, that accounting measure is supposed to drop.
Boeing jumped 4.1 percent to $138 at 7:42 a.m. in New York before regular trading. The shares advanced 1.9 percent this year through Tuesday to beat benchmark U.S. indexes.
Regarding 2015 outlook, earnings excluding some pension expenses will be $8.20 to $8.40 a share. Boeing has had a recent history of setting conservative financial targets in January and then outperforming against those goals in subsequent months, Joseph Nadol, a JPMorgan Chase & Co. analyst in New York, wrote in a Jan. 15 report.
“Expectations seem far more restrained this year and we believe that the current shareholder base is more in tune with the way that the company approaches laying out initial expectations,” said Nadol, who rates Boeing as overweight. Bernstein’s Harned recommends the shares as outperform.
Boeing preserved the biggest-planemaker title in 2014 over Airbus Group NV with record deliveries of 723 commercial jets, a 12 percent increase. The firm's civilian division is about twice as large as its military-aircraft business, which has been pinched by U.S. defense-spending cutbacks.
