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Seats being tested for fit in the CSeries plane which sits in their plant in Montreal, September 22, 2010. (Christinne Muschi/Christinne Muschi for The Globe and Mail)
Seats being tested for fit in the CSeries plane which sits in their plant in Montreal, September 22, 2010. (Christinne Muschi/Christinne Muschi for The Globe and Mail)

Despite falling share price, better days ahead, Bombardier says Add to ...

Bombardier Inc. senior executives are urging investors rattled by the slumping share price and flagging jet sales to keep the faith as new products come out of the pipeline to help boost growth.

The Montreal-based plane-and train-maker reported disappointing first-quarter results Thursday, but had previously warned that the quarter would be soft.

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The share price has fallen to the $3.50 range from about $7 a year ago as the company struggled with a sharp drop in commercial jet sales and market concerns over its ability to find enough customers and make a success of its untested new 100-plus seat C Series airliner.

“We need to invest in growth products,” Bombardier president and chief executive officer Pierre Beaudoin said after the company’s annual meeting.

“There’s a lot of investment. These are for the long term.”

New products will help boost revenue and profits, resulting in a positive knock-on effect on the stock, he said.

Bombardier is committed to about $2-billion this year in development costs for the C Series as well as two new business jets in the top-end Global family. It has other projects in the works as well.

The C Series’ first flight is scheduled for the end of the year.

While the company’s larger business-jet segment has been holding up well through the tough global economic climate, sales of commercial planes have been hobbled by tighter credit for new jet financing, Guy Hachey, president and chief operating officer of Bombardier Aerospace, told reporters.

“Generally, the financing environment is challenging,” he said.

As airlines buy fewer planes, the competition among aerospace companies to win sales ratchets up, Mr. Hachey added.

Bombardier must win more regional jet and turboprop orders this year if it is to avoid having to cut production rates in 2013, Mr. Hachey said. To clinch more deals, the company has expanded its sales force and increased sales campaigns in emerging markets, he noted.

The company said first quarter profit fell 14 per cent to $190-million (U.S.), or 10 cents per share, from $220-million, or 12 cents, in the year-earlier period.

Revenue dipped 25 per cent to $3.5-billion from $4.7-billion a year earlier.

The firm order backlog, however, increased in size, rising to $55.2-billion at the end of March from $53.9-billion at the end of December, 2011.

There were 68 new plane orders in the quarter, compared with 86 in the year-earlier period, the company said.

Management is maintaining guidance for aircraft deliveries this year of 180 business jets and 55 commercial jets.

National Bank Financial analyst Cameron Doerksen said in a research note that he estimates the earnings per share at closer to 8 cents after a recovery related to litigation and a lower-than-expected tax rate are taken into account.

Bombardier delivered 37 aircraft in the quarter, below Mr. Doerksen’s forecast of 43, and below the 61 in the first quarter of last year.

Desjardins Securities analyst Benoit Poirier said in a note that regional aircraft momentum is improving and development of the C Series and Learjet 85 are on target.

At Bombardier Transportation – the rail division – sales fell 20 per cent to $2-billion.

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