UPDATE 2-Bombardier revenue rises; CSeries faces delivery delay

Thu Aug 1, 2013 2:40pm EDT

* 2nd-qtr net earnings/shr $0.10 vs $0.08 year earlier

* Revenue rises 8 pct

* Entry-into-service expected 12 months from first flight

By Solarina Ho

Aug 1 (Reuters) - Canadian plane and train maker Bombardier Inc reported a 22 percent rise in second-quarter profit on Thursday as its train business grew, but pushed back the date when its all-new C-Series plane will be ready for delivery.

Bombardier Inc, the world's fourth largest planemaker and largest trainmaker, insisted the new plane would still enter service a year from the first flight. It has already pushed back that first flight three times and now says it is due to fly in the coming weeks.

"So we have a delay of two months from first flight, the entry into service will be two months delayed." Chief Executive Pierre Beaudoin said on a conference call with analysts and media.

The $3.4 billion CSeries program is Bombardier's ticket to the larger commercial jet market dominated by Boeing Co and Airbus. The CSeries is a single-aisle aircraft family with seating for up to 160 passengers.

Many industry observers have been skeptical about the company's target to put the plane into service by mid-2014, although Lufthansa, the CSeries launch customer, said last week it was not overly concerned by the latest delay.

"We have some buffer for introduction of the aircraft," said Nils Haupt, a spokesman for Lufthansa. "We think that we will have the aircraft in service in the second half of 2014. So that's what we still think."

Bombardier shares were little changed at C$4.95 after rising more than 2 percent earlier. The shares are up some 25 percent since the company unveiled the CSeries test plane in early March.

Bombardier executives said the three delays, one from last year and two in 2013, have not had a material impact on costs.

Bombardier's second-quarter net profit rose to $180 million, or 10 cents per share, from $147 million, or 8 cents per share, a year earlier. Adjusted to exclude one-off items, the company reported income of $158 million, or 9 cents per share.

Revenue rose 8 percent to $4.43 billion.

"While there are clearly still risks to the CSeries program that will likely keep the stock fairly volatile, the fundamentals in the business jet market and increasingly for transportation are positive," said Cameron Doerksen, an analyst with National Bank Financial.

The company reported a record order backlog of $65.5 billion at the end of June.

Revenue in Bombardier's aerospace unit was flat at $2.26 billion in the quarter. The backlog was $33.4 billion as of June 30, compared with $32.9 billion at the end of December.

It delivered 57 aircraft during the quarter, compared with 62 during the same period a year ago.

Revenue in the transportation unit, which makes trains, rose 22 percent to $2.18 billion. The order backlog in the unit was $32.1 billion as of June 30, compared with $32.0 billion at the end December.

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Comments (1)
Venerability wrote:
Thankful for small favors!

That was the most Bullish comment from the ever-vocal Mr. Doerksen in literally years!

And the least biased story from Reuters Canadian bureau.

Although perhaps you fellas would be interested to know that 24 analysts follow the company and that the strong majority of them are raging Bulls – whom we never, ever get to hear from.

Oh, well – Those not fast asleep understand what a contrast this report was with Embraer’s.

And ERJ has been mercilessly Pairs Traded with Bomber for about two years now, ERJ Long, Bombardier Short. Those doing it are deep-pocketed, if not a particularly large group (all Shorts are only 4 percent of the float). But they have skewed both stocks so immensely, it is by now a sort of joke.

Now, it is clear these traders either have to reverse the Pairs Trade and go Bomber Long, ERJ Short – or unwind it altogether.

Another impediment, of course, in full swing today, is the group of Bay Street Cronies, led by Toronto Dominion, which have interwoven their Yen Short of the Ages bets – way, way overdone and over-leveraged, a la LTCM or more recently MF Global – with Kill Loonie! and Kill Gold! bets. These bets have naturally led to this Crony Group being Short the US versions of dual-listed Canadian-US stocks. Most of these dual-listed stocks are in the Gold or Energy sectors. But Bombardier is also affected on a day like today, when the Crazy Yen Shorters were given their way and rampaged all Markets.

Ironically, there has been lots of news which should logically be bringing the Loonie back to parity and beyond it a bit, into the range it has held for the past decade or more. It’s the current situation – all Yen induced – which is the anomaly.

But over-leveraged currency plays take time to unwind, and there are setbacks, as in today’s action.

Aug 01, 2013 5:21pm EDT  --  Report as abuse
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