Boeing Q2 profits dip 19 per cent to $852 million
25 Jul 2008
US aerospace giant, Boeing Co, reported a 19% drop in Q2 net income to $852 million from $1.05 billion last year. It's Commercial Airplanes division also posted a 19% decrease in operating earnings to $777 million, from $960 million, in the year-ago period. Chairman, president and CEO, Jim McNerney, however forecast a much stronger second half for the company.
CFO James Bell said that "pricing will be a little better on delivered aircraft" in the second half of the year, pointing out that far more narrow-bodies than wide-bodies were delivered in the second quarter, This ratio, he said, would change in the second half.
On the troubled 787 programme, McNerney expressed confidence that the first Dreamliner flight will be achieved in the fourth quarter. He stressed that the programme's global supply chain was now hitting the mark as far as performance levels were concerned. "I visited all of [the major 787 suppliers] last month and I have a great deal of confidence in their business progress," he said. "The plane will be flying in the fourth quarter. . .We are on or slightly ahead of both the assembly and testing schedule. It's a matter of getting the final systems in."
Q2 revenues of the Commercial Airplanes division fell 2%, to $8.57 billion, despite an 11% rise in deliveries to 126 units, from 114, in the year-ago period. The division delivered 100 737NGs, five 747s, three 767s and 18 777s.
The division also took in 187 orders in the quarter, bringing total orders for the first-half of 2008 to 476. Total order backlog at the end of the second quarter was $275 billion, or about eight times the division's annual revenue.
Total company quarterly revenue remained flat at $16.96 billion even as expenses rose 2.4% to $13.94 billion. Operating profit was down 17% to $1.25 billion, from $1.51 billion, in the year-ago period, the company said.
McNerney said that research and development expenses on the 787 and 747-8 will "start to come down significantly in the second half of this year." These expenses will be refocused on a possible "refresh" of the 777 to counter a possible A350-1000 and the "technology involved" in a potential 737 successor, he said.
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