The Boeing Co. today reported better-than-expected financial results for the fourth quarter of 2017 and a rosier-than-expected outlook for the year ahead, sending its share prices up 5 percent.
“Thanks to the dedicated efforts of employees throughout our company, Boeing delivered 2017 financial results that included record earnings, record cash flow, and record commercial aircraft deliveries,” Dennis Muilenburg, the company’s CEO, president and chairman, told journalists and analysts in a conference call.
Boeing’s performance was boosted by an upturn in the airline industry’s jet purchases as well as the recently enacted tax-cut bill, and the company projects a continuation of the positive trend in 2018.
Commercial jet deliveries are expected to exceed last year’s record of 763 aircraft, reaching a level as high as 815. Revenue should rise from $94 billion in 2017 to somewhere between $96 billion and $98 billion in 2018, Boeing said. Operating cash flow is projected to go from $13.3 billion to $15 billion.
Thanks to a fourth-quarter sales rush, Boeing Commercial Airplanes now has a record-setting backlog of more than 5,800 orders, Muilenburg said. The planes’ list prices add up to well more than $400 billion.
— Dennis A. Muilenburg (@BoeingCEO) January 31, 2018
Fourth-quarter adjusted earnings were set at $4.80 a share, including a $1.74 gain tied to the tax cut. Total adjusted earnings for 2018 should amount to somewhere between $13.80 and $14 per share, Boeing said.
The fourth-quarter performance and the year-ahead forecast exceeded most analysts’ expectations. “This was another great quarter from Boeing, with no execution issues and continued strong cash generation,” Rob Stallard, aerospace and defense analyst for Vertical Research Partners, said in an email.
Stallard noted that Boeing Commercial Airplanes “led the way,” with sales up 9 percent year over year, and an operating margin of 11.5 percent for the quarter.
Boeing’s chief financial officer, Greg Smith, said the tax cut “certainly provides a stronger foundation for us” going forward. Muilenburg said the money would go toward boosting shareholder value as well as supporting initiatives such as the $300 million in investments and contributions announced last month.
“We will be ramping up our investment in innovation as a result of tax reform, in a meaningful way,” Muilenburg said.
Among other topics covered in the teleconference:
- Muilenburg said Boeing was continuing its talks with potential customers on the options for launching a “middle-of-the-market” airplane informally known as the 797. He noted that the jet would enter service in the 2024-2025 time frame, but only if Boeing gives the go-ahead. “We’re not going to be rushed into a decision here,” Muilenburg said.
- Talks with the Brazilian jetmaker Embraer have been “productive,” Muilenburg said, but he held off from saying whether those talks might lead to a merger or other type of combination. Muilenberg said there was no direct link between the discussions with Embraer and Boeing’s trade dispute with Canada’s Bombardier — which has struck its own deal with Airbus, Boeing’s European archrival.
- Muilenburg said he couldn’t comment on the next step in the Bombardier battle until Boeing has fully reviewed last week’s decision by the U.S. International Trade Commission to reject levying a 292 percent tariff on Canadian jet sales to U.S. airlines.
- Boeing expects its recently reorganized service business to exceed an industry standard of 3.5 percent growth this year, and Muilenburg reiterated his view that services could rise from the current revenue contribution of $15 billion to $50 billion annually. He acknowledged that there’s “a lot of work still ahead of us.” Data analytics and other digital services provide particularly promising opportunities: “We’re at the early part of that digital growth,” Muilenburg said.
- Boeing’s commercial spaceflight program is “continuing to move smartly” through development, Muilenburg said. He noted that the first launch of Boeing’s CST-100 Starliner space taxi to the International Space Station is due to take place this year. Muilenburg, who suggested last month that Boeing could beat SpaceX to Mars, said space travel will be a “very important marketplace for the future.”