Boeing 3rd-Quarter Profits Drop 31%

Wednesday, October 29th 2003, 12:00 am
By: News On 6

CHICAGO (AP) _ Boeing Co.'s third-quarter earnings sank 31 percent on the heavy costs of shutting down production of the 757 jet, but solid results from its growing defense business helped it beat Wall Street's expectations. Its stock surged.

Profits from the company's defense operations, which include the manufacture of military aircraft, weapons and launch systems, jumped 38 percent.

But the shrinking commercial airplanes unit saw earnings fall 90 percent because of pension contributions and a $184 million pretax charge to scrap the 757.

Net earnings for the July-through-September period were $256 million, or 32 cents per share, down from $372 million, or 46 cents per share, a year earlier.

That was significantly higher than the 25-cents-per-share consensus estimate of analysts surveyed by Thomson First Call. As a result, Boeing shares rose $2.56, or 7 percent, to $38.60 in morning trading on the New York Stock Exchange.

Revenues dropped 4 percent to $12.24 billion from $12.69 billion _ the bulk of it from the defense and space unit, where revenue rose 12 percent to $7.3 billion.

The Seattle-based commercial airplanes division, which provided a majority of Boeing's revenue until recently, generated $5.05 billion, or 41 percent. That was a 17 percent drop from a year earlier.

With its deliveries and orders down drastically in a struggling airline industry, Boeing is expected to be displaced by Airbus as the world's largest commercial jet manufacturer when full-year figures are in.

``Although there have been encouraging signs, the downturn remains severe and many airlines continue to incur losses that dampen demand across all airplane types,'' Boeing said in its earnings release, anticipating no recovery before at least 2005.

The company lowered its guidance for full-year earnings by a nickel a share to a range of minus 2 cents to minus 12 cents per share, citing the 757 shutdown decision that it announced Oct. 16. But it raised its guidance for 2003 revenues to $50 billion from $49 billion because of strong defense sales.

Boeing left unchanged its forecasts for 280 airplane deliveries in 2003, 275 to 290 deliveries in 2004 and $52 billion in 2004 revenues.

For the first nine months of the year, the company had a net loss of $414 million, or 52 cents a share, compared with a loss of $98 million, or 12 cents a share, over the same period of 2002. Revenues were $37.29 billion, down 8 percent from $40.37 billion.