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Boeing quarterly profit climbs 38%

NEW YORK (MarketWatch) -- Boeing Co. posted Wednesday a 38% jump in first-quarter profit as strong commercial aircraft sales boosted productivity and operating profit margins.
For the quarter, the Chicago-based aerospace manufacturer said net earnings rose to $1.21 billion, or $1.62 a share, from $877 million, or $1.13 a share in the year-ago period.
The builder of commercial and military aircraft, as well as rockets and military defense systems, said total revenue jumped 6% to $16 billion from $15.4 billion last year.
Analysts polled by FactSet Research expected the Dow 30 component to turn in earnings of $1.34 a share on revenue of $16.5 billion, on average.
An increase in commercial aircraft volume helped lift Boeing's operating margins to 11.3%. "It was an unbelievable quarter, and I haven't seen that for years," said Paul Nisbet, JSA Research analyst.

BA 82.09, +3.53, +4.5%) rose 4.5% to close at $83.36, leading the Dow Jones Industrial Average
.DJI 12,763.22, +42.99, +0.3%) to a 42-point gain.
The stock has fallen more than 26% since hitting an all-time high of $107.83 on July 25, due primarily delays of its next-generation wide-body commercial aircraft, the 787 Dreamliner. See related story.
Boeing has said it now expects the 787 to take its maiden flight in the fourth quarter, with delivery of the aircraft to begin in the third quarter of 2009.
"While we are deeply disappointed in our performance to date, and the impact our delays will have on our customers, the new plan reduces our schedule risk significantly," said Chief Executive Jim McNerney on a post-earnings call.
Total firm orders for the 787 stood at 892 at the recent quarter's end.
Despite the troubled 787 program and the loss of a $35 billion contract for a new fleet of aerial refueling tankers for the U.S. military, Boeing had a solid quarter.
Cash flow rose to $1.52 billion in the first quarter from $277 million in the same period last year, while total company order backlog was up 32% to $346 billion, getting a big lift from commercial airplane and V-22 Osprey helicopter orders.
Backlog now represents about five years of production at the current rate, J.S.A. Research's Nisbet said.
Boeing reaffirmed its full-year earnings guidance of $5.70 to $5.85 a share, and forecast 2009 earnings in the range of $6.80 to $7.00 a share. Wall Street is looking for full-year earnings of $5.94 a share in 2008 and $6.58 a share in 2009.
Analysts had said that 2009 guidance would be important in helping to gauge the health of the 787 program, with Credit Suisse stating that the forecast needed to be at least above $6.50 per share to calm investor concerns over additional delivery delays. See related story.
Boeing did warn that the U.S. economic situation became "more tenuous" over the first quarter, but for now the softer capital markets aren't having a significant impact on the company's business.
"We are closely monitoring this situation," McNerney said on the call.
As a result of the 787 delays, Boeing estimated its research and development costs for 2008 will rise to $3.6 billion to $3.8 billion, up from its previous outlook of $3.2 billion to $3.4 billion.
Operating margins in Boeing's commercial airplanes increased 2.7 points to 12% in the first quarter, helping to raise segment profit by 39% to $983 million.
Commercial airplanes operating margin is expected to be 11.5% for all of 2008 and 2009, reflecting lower R&D costs and production of Boeing's first 787s.
Boeing anticipates delivering between 475 and 480 commercial airplanes in 2008 and between 500 and 505 airplanes in 2009, including 25 Dreamliners.
"Commercial airplane demand globally remains strong and is being aided by high fuel prices and environmental concerns," said CEO McNerney. "In addition, there is still a significant need for airplane replacement within the U.S. carriers."
In its integrated defense systems unit, Boeing said operating margins expanded by 120 basis points to 11.4%, helping to lift profit by 10% to $860 million