Air Canada celebrates their 75th anniversary with the arrival of the world newest most modern commercial aircraft, the Boeing 787 Dreamliner at the Air Canada hanger in Toronto on Friday, March 2, 2012.Nathan Denette/The Canadian Press
Boeing Co. posted a higher-than-expected quarterly profit on Wednesday, helped by an increase in commercial airplane deliveries, and the world's largest aerospace and defense company raised its earnings forecast for the year.
The news from Boeing, which makes commercial airplanes and military products, sent its shares up more than 2 per cent in premarket trading.
The company is raising production rates on commercial airplanes to meet increased demand while battling defense budget constraints.
"As of late, investors have turned Boeing into an execution story, and execute they did," said Alex Hamilton, managing director of EarlyBirdCapital.
"We believe investors should be pleased given the performance of all sectors, including defense, which is highly impressive given the backdrop of the defense budget," Mr. Hamilton said.
Boeing's first-quarter net profit rose to $923-million (U.S.), or $1.22 per share, from $586-million, or 78 cents per share, a year earlier.
Excluding a gain from resolved litigation, earnings were $1.11 per share, beating the analysts' average estimate of 94 cents, according to Thomson Reuters I/B/E/S.
Boeing declined to identify the litigation. Earlier this month, a California appeals court threw out Pendrell Corp's potentially $775-million victory against Boeing in a lawsuit over launch and satellite contracts between the two companies.
Boeing had been setting money aside in case of an unfavorable ruling, but the outcome made this provision unnecessary.
Shares of Boeing were up 2.4 per cent to $75 in premarket trade after the results.
The company, which competes with EADS unit Airbus for orders, said revenue rose 30 per cent to $19.4-billion, topping expectations for $18.4-billion. Boeing said its order backlog at the end of the quarter was $380-billion, up from $356-billion at the beginning of the year.
The company raised the upper end of its 2012 profit forecast to $4.35 a share from $4.25 while keeping the low end at $4.15. It affirmed its 2012 revenue outlook of $78-billion to $80-billion.
Chief Executive Officer Jim McNerney said in a statement that the company's outlook remained positive.
Revenue at the commercial unit increased 54 per cent to $10.9-billion on higher delivery volume and an improved mix of the planes it delivered. Shares of the company typically track commercial orders and deliveries.
Boeing, which gets paid for its airplanes when customers receive them, has said it delivered 137 commercial airplanes in the first quarter, up 32 per cent from a year earlier. Most of the growth came from 737 deliveries.
At the defense business, revenue increased 8 percent to $8.2-billion. Sales of military aircraft rose 27 per cent to $4.3-billion.
Boeing logged orders for 805 commercial airplanes in 2011, adjusted for cancellations. As a result, it lost the race to Airbus, which had orders of 1,419.
Boeing has pledged to strike back in 2012 with sales of its revamped narrowbody, the 737 MAX, which features a new, fuel-efficient engine. The plane is due to enter service in 2017.
The company booked 412 net orders for commercial airplanes during the quarter, including 301 firm orders for the MAX.
The MAX competes with the Airbus A320neo, which also has a new engine.
Boeing is increasing production rates on its commercial airplane programs, including the 787 Dreamliner, its new carbon-composite aircraft. The first delivery of the Dreamliner came last year after three years of delays.
The company wants increase monthly production of 787s to 10 by the end of 2013 from the current rate of 3.5. Some experts believe that target is unattainable.
The target appeared even less realistic in February after Boeing found a flaw on the fuselage of as many as 55 Dreamliners that needed to be corrected before it could deliver the airplanes.
Boeing said previously that the glitch had resulted in signs of "delamination" on a support structure in the rear fuselage. Delamination occurs when repeated stress causes laminated composite materials to begin to separate.