UPDATE 5-Boeing profit up on better production; revenue slips

* Q1 EPS 78 cents vs Wall Street view 70 cents

* Revenue down 2 pct to $14.9 billion

* Shares close up 0.75 percent at $76.12 (Adds new analyst quote, closing share price.)

By Kyle Peterson

CHICAGO, April 27 (Reuters) - Boeing Co's (BA.N) quarterly profit rose 13 percent and beat expectations despite a slight decline in revenue as the company improved production efficiency on some key offerings such as the 737 and the 777.

The world's largest aerospace and defense company on Wednesday reaffirmed a full-year outlook that reflects a rebound in commercial airplane orders and resilience in the face of sagging defense budgets.

Boeing also reconfirmed plans to deliver the long-delayed 787 Dreamliner in the third quarter and said it would give clarity on the next version of the 737 later this year.

Shares gained on the report, which featured an order backlog of $329 billion -- up 2.5 percent from a year earlier.

"It's really just reaffirmation of the guidance," said Kenneth Herbert, an analyst at Wedbush Securities.

He said Wall Street also is pleased to see the high-profile 787 program finally on track for delivery and Boeing's "confidence in the development milestones."

"That's why people are fired up. We're getting close," Herbert said.

Speaking on a conference call with analysts and reporters, Boeing Chief Executive Jim McNerney said the tsunami and earthquake in Japan last month had not had a significant impact on the company's operations. He said certain suppliers were damaged and that Boeing was watching for problems.

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Boeing's first-quarter profit was $586 million, or 78 cents per share, topping analysts' average forecast for 70 cents a share, according to Thomson Reuters I/B/E/S.

In the year-earlier quarter, Boeing earned $519 million, or 70 cents per share. Revenue slipped 2 percent to $14.9 billion, partly because it delivered fewer 777s than it did a year ago.

Boeing has said it delivered 104 commercial planes in the first quarter, including 13 thirteen 777s. Aircraft manufacturers get paid on delivery.

The company said it managed to boost profits despite declining revenue because of efficient production methods and reduced flow times in core operations, Boeing said.

Boeing shares, a Dow component, closed up 57 cents, or 0.75 percent, at $76.12 on the New York Stock Exchange.

"I think people are getting comfortable with the valuation, and people are getting comfortable with the recovery," said Alex Hamilton, managing director of EarlyBirdCapital, a boutique investment bank.

"What is clear is that this recovery is ongoing," he said.

Boeing stood by its full-year 2011 outlook. It expects revenue of $68 billion to $71 billion and earnings per share of $3.80 to $4. In 2010, Boeing earned $4.45 per share on revenue of $64.3 billion.

Boeing, which competes with EADS (EAD.PA) unit Airbus, splits its business almost evenly between commercial airplanes and defense products. But its stock tends to track commercial airplane orders and deliveries more closely.

(For a Boeing earnings graphic, see r.reuters.com/dax29r.)

Boeing Commercial Airplanes' first-quarter revenue fell 5 percent to $7.1 billion on lower 777 deliveries. Its backlog totaled more than 3,400 planes valued at $263 billion.

Boeing Defense, Space & Security's first-quarter revenue was $7.6 billion, flat with a year ago. Earlier this year, Boeing snared a $30 billion Pentagon order for 179 U.S. Air Force refueling planes.

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Boeing repeated that first delivery for the 787 Dreamliner was on track for the third quarter, to Japan's All Nippon Airways (9202.T).

Boeing has taken about 835 orders from 56 customers for the lightweight carbon composite aircraft, which is about three years behind its original schedule due to labor problems and snags in the global supply chain.

"There is very strong demand for this airplane," McNerney said on the conference call.

"The profitability will not be high at the beginning," the chief executive said, adding "there are significant opportunities to increase the profitability of it."

Of the narrow-body 737, he said Boeing was still debating whether to redesign the hot-selling narrow-body or simply put a more fuel-efficient engine in the current model. A redesigned plane would take longer to bring to market but would offer greater fuel efficiency.

The company has delayed making that decision for months even though Airbus has already said it would re-engine its competing A320. Many industry watchers had expected Boeing to announce a decision last year. More recently, Boeing has said it may share its direction by mid-year.

"I'm not trying to signal any change here," McNerney said. "This is the year where we've got to harden up our plans to give our customers and our suppliers the direction they need."

He repeated that Boeing was leaning toward a redesign.

"I'm a little concerned about the lack of any proactiveness on the single-aisle (redesign or re-engine only) replacement strategy," said Richard Aboulafia, aerospace analyst at The Teal Group. "But they might surprise. They might have something up their sleeve."

Boeing said delivery of the first 747-8 Freighter is still planned for mid-2011. (Reporting by Kyle Peterson; Editing by Derek Caney, John Wallace, Gary Hill and Bernard Orr)