Textron expects new Cessna models to boost revenue
(Reuters) - Textron Inc (TXT.N), maker of Cessna aircraft and Bell helicopters, said it expects revenue at its flagship business jet unit to rise 19 percent in 2014, driven mostly by deliveries of two new aircraft launched late last year.
The world's largest maker of business jets reported a jump in fourth-quarter profit as Cessna deliveries picked up after five straight quarters of decline.
Textron shares rose as much as 8.7 percent to their highest in more than five years in morning trading.
Business jet sales have been sluggish for the past two years, mainly due to U.S. government budget cuts. But spending is expected to pick up in 2014 as business owners become more confident about the U.S. economy.
"The (economic) uncertainty is subsiding, we believe that there is pent up demand and cash waiting on the sidelines," said Jens Hennig, vice-president of operations at General Aviation Manufacturers Association (GAMA).
New models are prompting customers to upgrade their jets, driving deliveries, analysts said.
Textron received certification to ship two business jets — the Citation M2 and Citation Sovereign+ — last month. The company is also expected to get clearance for the Citation 10 model soon.
This year will be the first full year of deliveries of these jets — a key metric to gauge their performance.
"We've seen very strong demand around the M2 product (and) the Sovereign (also) did well ...," Chief Executive Scott Donnelly said on a conference call with analysts.
Textron delivered 62 Citations in the fourth quarter ended December 28, up from 53 a year earlier.
The industry is optimistic that business jet deliveries will pick up after hitting the bottom in 2013, Hennig said.
Global business jet shipments fell 2 percent to 421 aircraft in the first nine months of 2013, according to GAMA, which represents more than 50 fixed-wing aircraft makers. Full-year figures are expected on February 19.
Textron said on Wednesday it expects 2014 earnings of $2.00-$2.20 per share on revenue of $13.2 billion, of which about $3.3 billion is expected to come from Cessna.
Analysts on average were expecting earnings of $2.23 per share on revenue of $13.11 billion, according to Thomson Reuters
Income from continuing operations rose to $171 million, or 60 cents per share, in the fourth quarter from $146 million, or 50 cents per share, a year earlier.
Revenue rose 4 percent to $3.50 billion.
Providence, Rhode Island-based Textron's shares were up 6.5 percent at $38.45, after touching a high of $39.24, on the New York Stock Exchange on Wednesday morning.
They have gained more than a third in the past 12 months and have outperformed the S&P 500 .SPX index, which has risen about 24 percent.
(Editing by Joyjeet Das)
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