Bombardier offers upbeat sales forecast despite CSeries setbacks
TORONTO, March 20
TORONTO, March 20 (Reuters) - Bombardier Inc, one of the world's leaders in making both planes and trains, provided an upbeat 2016 revenue forecast on Thursday despite its struggles to get its costly new Cseries jetliner into service.
Bombardier Chief Executive Pierre Beaudoin told investors in New York that it expects 2016 revenue to be between $23 billion and $25 billion, and that it could top $30 billion in as few as five years.
The Montreal-based company had 2013 revenue of $18.2 billion, and has already forecast 2014 revenue of about $20 billion. It expects revenue in 2015 will fall somewhere between that of 2014 and 2016.
RBC analyst Walter Spracklin said in a research note the 2016 forecast was ahead of his $22 billion estimate, and noted that new 2014 guidance of $1.5 billion in operating profit before interest, depreciation and amortization was also higher than his $1.3 billion forecast.
CSERIES STILL IN TESTING
The projections come after Bombardier, which unveiled its new CSeries jetliner a year ago to much fanfare and high expectations, began 2014 by pushing back the date of aircraft's entry into commercial service to the second half of 2015. It had originally expected the plane to be in service at the end of last year.
The multiple delays have been disappointing and costly setbacks in the company's ambitious plan to pit the CSeries, the product of a $4.4 billion development program, against the smaller jetliners made by industry giants Boeing Co and Airbus Group.
Bombardier's shares, which closed up 1.2 percent on Thursday at C$4.15, have languished far behind those of its competitors in the past two years, and are roughly at the same price they were in March 2012. Shares of Embraer SA, Boeing and Airbus, meanwhile, have all risen 40 percent or more.
Bombardier, which has several planes set to begin commercial service in the coming years, declined to provide specific guidance for its aerospace division until program schedules are firmer.
"We'd rather not at this point give specific targets," Beaudoin said. "That being said, we feel there's substantial upside in aerospace margin."
On Thursday, the company postponed the first flight of its new Learjet 85 business jet due to poor weather. Previously, it had targeted the Learjet 85's first flight for the end of 2013 and entry-into-service by summer 2014.
The Learjet 85 was set to take off from Wichita, Kansas, Thursday morning, but weather conditions were not optimal, Beaudoin said. He added that the maiden flight of the new business jet was still imminent.
Bombardier said it has a record backlog of orders that represents more than four years of manufacturing revenue.
Bombardier also said it has sufficient liquidity and that it expects its cash flow to increase significantly as it scales down spending on development programs.
The company said its transportation unit, which makes trains, will continue to generate strong free cash flow, while overall pension plan costs and contributions will fall in 2014.
CSeries flight tests, which had an unusually slow start, were progressing well, with March flight hours set to double the number of hours flown in February, the president of the aerospace division told analysts.
The three CS100 planes being tested are expected to ramp up their flying hours in April, he said. The CS100 is the smaller of two CSeries models in development.
Test results so far match what the company had expected, said Guy Hachey, president and chief operating officer of Bombardier Aerospace, adding that the planes are performing "extremely well" on fuel efficiency.
The highly anticipated CSeries is built using lightweight composite materials and other technologies designed to allow it to burn much less fuel, be significantly quieter, and have sharply lower operating costs for airlines.
Separately on Thursday, Deutsche Bahn ordered 29 TALENT 2 multiple train units from Bombardier Transportation, valued at about 146 million euros ($201.24 million).
The Wall Street Journal reported that Bombardier may have lost a 1.2 billion Danish kronor order for 15 new trains, after Denmark's Ministry of Transport said it canceled an order.
Bombardier spokesman said there is no official word on a cancellation.
($1=0.7255 euros) (Editing by Jeffrey Hodgson; and Peter Galloway)