Bombardier profit dips as plane deliveries, orders fall
By Solarina Ho
TORONTO (Reuters) - Canadian plane and train maker Bombardier Inc reported a 15 percent fall in net profit on Thursday, pressured by fewer aircraft orders and deliveries in the third quarter and contract issues in its train unit.
The results came in below expectations and sent shares falling 8 percent on the Toronto Stock Exchange.
"While the weaker aircraft deliveries were mostly anticipated, we are clearly disappointed by the margin performance in transportation," Cameron Doerksen, an analyst with National Bank Financial, said in a client note.
Montreal-based Bombardier did not provide any updates on its new CSeries plane, which was unveiled in March and took flight for the first time in September after months of delays.
The company hopes the aircraft family can catapult it into the low end of a market now dominated by Boeing Co and Airbus .
But firm orders for the CSeries are moderate so far at 177, as potential buyers wait for flight test results to validate the company's claims about the new jetliner's fuel efficiency and cost savings potential. There are currently 403 total orders and commitments with 15 customers and operators.
After the plane's inaugural flight, attention is now focused on test results and when the plane can go into commercial service - currently set for an ambitious 12 months from first flight.
Many analysts are sceptical the first customer can begin operating a CSeries plane by next September and Bombardier has said it will provide an update on the entry-into-service (EIS) date in the coming months.
"The pace of CSeries flight testing has been slow so far with the fourth flight since first flight on September 16th only completed yesterday," noted Doerksen, who estimates the first quarter of 2015 to be a more realistic timeline.
BELOW EXPECTATIONS
Bombardier, the world's fourth-largest planemaker, delivered 45 aircraft during the quarter, down from 57 a year earlier. Net orders fell to 26 aircraft, from 83.
The backlog in the aerospace division was $32.9 billion (20.5 billion pounds) as of September 30, unchanged from December 31.
"In aerospace, results were in line with our guidance, but the low order intake and overall market conditions were a disappointment," Chief Executive Pierre Beaudoin said in a statement.
Aerospace revenue fell 13 percent to $2 billion.
Bombardier, the world's largest trainmaker, said revenue in that division rose nearly 11 percent to $2.1 billion.
The order backlog in the transportation unit was $32.6 billion as of September 30, up marginally from December 31.
Analysts said the transportation division's margins were affected by execution issues in a few large contracts.
The company also said that Google Inc Chief Financial Officer Patrick Pichette would join the board.
Bombardier's net profit fell to $147 million, or 8 cents per share, in the quarter ended September 30, from $172 million, or 9 cents per share a year earlier.
Adjusted earnings per share were unchanged at 9 cents a share.
Revenue dipped marginally to $4.1 billion from $4.2 billion.
Bombardier stock was down 8.1 percent at C$4.85 at midmorning on Thursday on the Toronto Stock Exchange.
Brazil's Embraer SA , the world's third-largest commercial planemaker and Bombardier's closest rival, reported a 10 percent fall in quarterly profit on Thursday.
(Additional reporting by Swetha Gopinath in Bangalore; editing by Jeffrey Hodgson and Matthew Lewis)
