* First C-Series flight will take place by end of June
* Learjet 85 launch pushed back to summer 2014
* 2013 aerospace EBIT margins expected to be similar to 2012
* Fourth-quarter adjusted EPS $0.10 vs $0.13 year earlier
* Shares tumble 9 percent on Toronto Stock Exchange
(Updates with analysts' comments, conference call and details)
By Solarina Ho
Feb 21 Bombardier Inc reported
quarterly results on Thursday that fell short of analysts'
expectations and issued a disappointing 2013 outlook, sending
shares of the Canadian aircraft and train maker down 9 percent.
The Montreal-based company's fourth-quarter profit tumbled
93 percent, pulled lower by charges for a plant closure and
global job cuts in its rail division.
Earnings before financing expenses, financing income and
income taxes, or EBIT before special items - a closely watched
performance measurement - fell 67 percent, and margins in both
its aerospace and transportation divisions slumped.
Bombardier said it expected EBIT margins at its aerospace
unit to be little changed in 2013 at about 5 percent and rise to
about 6 percent in 2014. In its transportation, or rail, unit,
it delayed its target for an 8 percent margin to 2014 from 2013.
It did not provide a 2013 margin forecast for the rail division.
"Although weak margins in both segments in Q4 are clearly
going to be disappointing to the market, we think that the more
important driver for the stock today will be the soft margin
guidance for 2013," said Cameron Doerksen, an analyst at
National Bank Financial.
Even so, Bombardier's total order backlog rose to a record
$66.6 billion at the end of 2012 from $55.8 billion at the end
of 2011. That includes orders for its new C-Series jetliner.
In its aerospace unit, the company said it plans to deliver
about 190 business and 55 commercial planes, reflecting the
strength of its business-jet segment and challenges for its
commercial planes. The company, the world's No. 4 commercial
plane maker, delivered a total of 233 planes last year.
"2013 is definitely nothing to write home about on the
aerospace margin side and that was disappointing, but 2014 and
beyond looks like it's going to get a lot better. Even in the
second half of 2013, I think we'll see improvements," said David
Tyerman, an analyst at Canaccord Genuity.
LEARJET LAUNCH DELAY
Bombardier announced it was pushing back the first delivery
of its Learjet 85 business aircraft to the summer of 2014 from
its previous target of late 2013.
The delay for the new Learjet was no surprise to analysts
who noted that initial deliveries usually take place about a
year after the first flight, which has yet to take place.
Bombardier said the revised timetable reflected technology
problems that have been resolved.
In a conference call with analysts on Thursday, the company
expressed confidence that the first flight of the C-Series - its
ticket into the larger commercial jet market - would take place
by the end of June.
Last November, it said it was delaying the first flight by
six months to June because of unspecified supplier delays.
Bombardier competes with Brazil's Embraer in the
smaller passenger-aircraft business. It aims to capture some of
the larger end of that market, now dominated by Airbus
and Boeing Co, with its 100-149 seat C-series plane.
On Wednesday, it said it won an order to sell up to 42 of
the C-Series jetliners to Russia's Ilyushin Finance Co in a deal
that could be worth as much as $3.42 billion.
"Having a customer make a firm commitment at this particular
point in the program is a very good indicator that the customer
feels like the program is on track," said Chris Murray, an
analyst at PI Financial Corp.
Bombardier executives said the company was at a "turning
point" and that it was "on the cusp of seeing significant
At least one analyst upgraded his rating on Thursday.
National Bank's Doerksen said that despite the poor quarterly
results and 2013 guidance, the focus will now shift to stronger
results in 2014 and beyond.
The company, which reports in U.S. dollars, said net profit
in the fourth quarter fell to $14 million from $214 million a
Bombardier took a restructuring charge of $119 million
related to the roughly 1,200 job cuts in its rail unit and the
closure of a freight car plant in Aachen, Germany.
A temporary drop in revenue from China, traditionally a
strong market for the company, also held back the results, but
executives said revenue had returned to normal and they were
expecting a significant increase in business from China in 2013.
On an adjusted basis, net income fell to $188 million, or 10
cents a share, from $227 million, or 13 cents a share, a year
Fourth-quarter EBIT totaled $175 million, or 3.7 percent of
revenues, compared with $293 million, or 6.8 percent, for the
same period a year earlier.
Revenue rose nearly 12 percent to $4.8 billion.
Revenue in the aerospace unit, which makes business,
commercial and amphibious craft, rose 30 percent to $2.6
billion. Revenue in the transportation unit fell 4 percent to
Free cash flow rose 44 percent to $850 million.
"Poor quarter, but better outlook going forward and that's
going to be what shapes the company's prospects from a share
price standpoint over the next few years," Tyerman said.
Bombardier stock, which fell as much as 11 percent, closed
9.1 percent lower at C$3.89 on the Toronto Stock Exchange in
above average trading volume.
(Additional reporting by Susan Taylor in Toronto and Bhaswati
Mukhopadhyay in Bangalore; Editing by Sriraj Kalluvila, Nick
Zieminski and Peter Galloway)