Boeing beats second-quarter profit estimates, raises forecast

SEATTLE Wed Jul 25, 2012 9:27am EDT

The Boeing logo is seen on a Boeing 787 Dreamliner airplane in Long Beach, California March 14, 2012. REUTERS/Lucy Nicholson

The Boeing logo is seen on a Boeing 787 Dreamliner airplane in Long Beach, California March 14, 2012.

Credit: Reuters/Lucy Nicholson

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SEATTLE (Reuters) - Boeing Co (BA.N) reported a greater-than-expected 3 percent increase in second-quarter profit and raised its full-year earnings forecast on Wednesday as rising airplane deliveries and defense sales offset higher pension costs.

The planemaker and defense contractor is rapidly ramping up production to meet rising demand for new, fuel-efficient planes and is set to overtake rival Airbus EAD.PA in plane deliveries this year. At the same time, it is weathering cuts in U.S. defense spending.

"This was a good quarter from Boeing," said RBC Capital Markets analyst Robert Stallard. "Where Boeing has arguably beaten is on defense, where expectations have been understandably low."

Its shares rose 2.7 percent in premarket trading, edging into positive territory for the year.

Boeing sought to restrain enthusiasm however, warning that "global economic growth continues at a slow pace (and) uncertainties remain," in a slide presentation for financial analysts.

The Chicago-based company said quarterly profit increased to $967 million, or $1.27 per share, from $941 million, or $1.25 per share, in the year-ago quarter.

Wall Street expected earnings of $1.12 a share, on average, according to Thomson Reuters I/B/E/S.

Revenue jumped 21 percent to $20 billion, boosted by commercial aircraft and military sales, topping analysts' average estimate of $19.4 billion.

Boeing's commercial plane unit, based in the Seattle area, reported a 34 percent increase in sales to $11.8 billion, while its defense unit's sales grew 7 percent to $8.2 billion, surprising some on Wall Street who had played down prospects for growth as the Pentagon slashes budgets.

On Tuesday, the leading U.S. defense contractor Lockheed Martin Corp (LMT.N) also reported better than expected earnings and raised its full-year forecast.

The gains in both its main units offset a 52 percent jump in pension costs to $593 million.

ON TRACK FOR NO. 1 SPOT

Boeing delivered 150 commercial planes in the quarter, up from 118 a year ago, a key number for profit as most of the payments from a customer come on delivery. Boeing is speeding up production of all its major models and is now delivering its new carbon-fiber 787 Dreamliner to customers after years of delays.

With these higher deliveries and resilient defense sales, Boeing raised its forecast for full-year earnings to $4.40 to $4.60 per share, up from a range of $4.15 to $4.35 per share. That is in line with the $4.56 per share analysts' expect.

The company stood by its forecast to deliver a record 585 to 600 commercial planes this year. Airbus, which has led the market in deliveries for the past few years, is targeting 570 commercial deliveries for 2012. Its parent EADS EAD.PA is due to report its own earnings on Friday.

Boeing also expects to win the annual order race for the first time since 2006 as it catches up with demand for revamped medium-haul jets. Former Boeing commercial chief Jim Albaugh last month predicted 1,000 total jetliner sales in 2012, compared with the European company's target of 600-650.

Boeing shares rose 2.7 percent to $74 in premarket trading, after closing at $72.03 on the New York Stock Exchange on Tuesday.

At Tuesday's close, the shares were down almost 2 percent so far this year, compared to a 2 percent gain in the Standard & Poor's aerospace index .GSPAERO and 6 percent gain for the Standard & Poor's 500 index .SPX.

(Additional reporting by Tim Hepher in Paris.; Editing by Lisa Von Ahn, Jeffrey Benkoe and Sofina Mirza-Reid)

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