Boeing Co. predicted earnings that met analysts’ estimates this year, assuming no drag from the grounding of its marquee 787 Dreamliner jet that’s stretching into a third week while investigators examine battery faults.
Net income for 2013 will be $5 to $5.20 a share, based on an assumption of “no significant impact” from the 787′s woes, Chicago-based Boeing said today in a statement. That compares with an average estimate of $5.16 in a Bloomberg survey of 25 analysts and $5.11 in 2012.
Boeing gave the forecast still lacking a timetable for when Dreamliner deliveries can resume, clouding the future of the company’s most technologically advanced jet just 16 months after its debut. Regulators ordered airlines to park the 50 planes in service worldwide on Jan. 16 after a battery fire on one jet and an emergency landing by another.
“Our first order of business for 2013 is to resolve the battery issue on the 787 and return the airplanes safely to service with our customers,” chief executive officer Jim McNerney said in the statement.
While deliveries have been halted, 787 production is continuing, Boeing said. The planemaker predicted shipments of more than 60 Dreamliners this year among a total of 635 to 645 commercial planes, up from 601 in 2012, as it increases airliner output more than 60 percent in the four years through 2014.
The forecast trailed an estimate of 663 deliveries this year from Jefferies Group Inc., noted Howard Rubel, a New York-based analyst with a buy rating on the stock.
“The biggest swing item will be the 787,” he said in a note. “Given the current production rate of five per month for the 787, coupled with aircraft coming out of rework, we believe this set the low-water mark.”
The light revenue guidance and lower-than-expected 787 deliveries are countered by a solid cash forecast, said Rob Stallard, an analyst with RBC Capital Markets in London who rates the stock outperform. Analysts including Stallard had expected Boeing to deliver about 93 Dreamliners this year.
Operating cash flow, which is driven by deliveries, was $7.5 billion last year and will be greater than $6.5 billion this year, Boeing said. Carriers pay about 60 percent of the price of a plane in installments after they place an order and the rest upon receiving the plane.
“Delivering at least 60 787s implies that we could stay at the current production rate of five a month and not necessarily ramp up to double production by the end of the year,” Christian Mayes, an analyst with Edward Jones & Co. in St. Louis, said today. “That might actually give suppliers more breathing room.”
The planemaker introduced an earnings measurement today that it said will give investors a clearer picture of its underlying business by adjusting for market fluctuation of pension expense. On that basis, so-called core earnings this year will be $6.10 to $6.30 a share, compared with 2012′s $5.88.
Pension expense will probably be $3.2 billion this year, up from $2.5 billion in 2012, Boeing said. That’s less than the $3.5 billion estimate for 2013 the company gave in October. Boeing also has said it’s facing a tougher defense market this year as the Pentagon cuts spending.
Full-year profit fell 2.9 percent to $3.9 billion, or $5.11 a share, surpassing Boeing’s October forecast for earnings of $4.80 to $4.95 a share. Fourth-quarter net income fell 30 percent to $978 million, or $1.28 a share, compared with $1.39 billion, or $1.84 a year earlier, after a favorable tax settlement of 52 cents a share wasn’t repeated.
Sales jumped 14 percent to $22.3 billion in the quarter, from $19.6 billion a year earlier. Revenue will rise this year to a range of $82 billion to $85 billion, from a record $81.7 billion in 2012, Boeing projected.
Boeing is building five Dreamliners a month now with plans to double that figure by the end of this year. U.S. and Japanese authorities are trying to determine what caused the battery-fault warning that forced an All Nippon Airways Co. 787 to make the Jan. 16 emergency landing in Japan and sparked a fire in the lithium-ion packs on a Japan Airlines Co. jet in Boston on Jan. 7.
“If it’s a first-quarter event they could easily make it up in the rest of the year,” Ken Herbert, an analyst with Imperial Capital in San Francisco, said of the halted 787 deliveries in an interview before earnings were released.
Analysts and investors have been baffled in estimating how much the 787′s grounding will cost Boeing. The expense will depend on how long the fleet is parked, what fixes might be needed, and what compensation may have to be paid to customers and suppliers.
“There’s a lot they can’t comment on” because information is being controlled by the authorities, Mayes, who has a hold rating on the stock, said in an interview earlier this week. “That’s going to be a struggle, as investors want more information and they can’t give it.”
Orders surged 49 percent last year to 1,203 planes, the second-most in company history after Boeing began selling an upgraded version of its popular 737 single-aisle jet. That pushed the backlog to a record 4,373 aircraft valued at $319 billion, which represents more than seven years’ worth of work at current production plans.
The higher deliveries, along with development of several new derivatives of the 737, 777 and 787, may be at risk from a possible strike by engineers.
The Society of Professional Engineering Employees in Aerospace expects to decide tomorrow whether to ask members next week to authorize a walkout over Boeing’s plan to switch new hires to a 401(k)-style retirement plan, rather than the traditional pension.
Boeing’s defense division also faces a threat from sequestration, the $500 billion in automatic U.S. defense cuts set to go into effect March 1 unless lawmakers agree on an alternate deficit-reduction plan. The company is repositioning the military business with a goal of getting 30 percent of revenue from abroad, up from 24 percent in 2011.
The commercial unit’s fourth-quarter earnings rose 29 percent to $1.27 billion as sales gained 32 percent to $14.2 billion. The defense division posted a 13 percent drop in profit to $751 million as revenue fell 2 percent to $8.34 billion.