(Reuters) - Slack demand for business jets from America’s rich led to Textron Inc (TXT.N) paring back its full-year profit forecast on Thursday, but the Cessna and Beechcraft jets maker said it would continue to raise prices even at the cost of sales.
The firm, which also makes Bell helicopters, said the lower forecast was also due to weak sales of vehicles such as golf cars and aircraft tow tractors in the third quarter and ongoing charges related to a program that did not pan out as expected.
Textron’s shares were down about 3 percent in morning trading, cutting their gains for the year to 7 percent.
Two quarters of soaring U.S. corporate profits have not yet produced the “Trump bump” in orders for new business jets that some industry executives had been hoping for, analysts have said.
Sales in Textron’s aviation business decreased 3.7 percent in the third quarter, hurt by low demand for King Air turboprops and Beechcraft T-6 trainers. Cessna sales were flat at 41 units.
Still, Textron would continue to push jet prices up even at the cost of lower volumes, Chief Executive Scott Donnelly said on an analyst call, adding that the prices were still too low.
With jets staying in the hangar, Textron brought all-terrain vehicles and snowmobiles maker Arctic Cat in deal that closed in March to boost its results.
But while Arctic Cat, along with Bell helicopters, accounted for the bulk of third-quarter sales growth, the focus on the snowmobiles maker came at the cost of the other sections in its industrial business, namely the golf cars and others, Textron said.
“We have thrown a lot of resources, particularly people at making sure that integration goes well. And frankly, we got a little behind on some of the rest of the business ... ,” Donnelly said.
Sales in the industrial business sales jumped 17.6 percent in the latest quarter, while sales in the Bell helicopter unit rose 10.6 percent.
That helped total sales increase 7.2 percent to $3.48 billion. But they fell short of analysts average estimate of $3.55 billion, according to Thomson Reuters I/B/E/S.
Textron’s income from continuing operations dropped 46.8 percent to $159 million, or 60 cents per share. On an adjusted basis, its profit of 65 cents per share topped analysts estimate of 62 cents.
The Providence, Rhode Island-based company lowered its 2017 adjusted profit forecast to $2.40 to $2.50 per share from $2.40 to $2.60.
Reporting by Arunima Banerjee in Bengaluru; Editing by Arun Koyyur and Savio D'Souza