FILE- In this Wednesday, July 11, 2012, file photo, a Qatar Airways Boeing 787 Dreamliner takes off during a display at the Farnborough International Airshow, in Farnborough, England. Boeing Co. posted an unexpected 3 percent improvement in second-quarter net income on strong sales of commercial airplanes. The results surprised Wall Street, and the company raised its earnings forecast for the year. The results announced before the markets opened Wednesday, July 25, 2012, eased investors' fears of an imminent slowdown in the company's defense unit, which produces Chinook helicopters and F-18s, among many other aircraft models.(AP Photo/Lefteris Pitarakis, File)
July 25, 2012 - 9:47 AM
NEW YORK, N.Y. - Boeing Co. posted an unexpected 3 per cent improvement in second-quarter net income on strong sales of commercial airplanes. The results surprised Wall Street, and the company raised its earnings forecast for the year.
The results announced before the markets opened Wednesday eased investors' fears of an imminent slowdown in the company's defence unit, which produces Chinook helicopters and F-18s, among many other aircraft models.
They also highlighted strong growth in the company's commercial airplane unit, which has been rapidly increasing the pace of production for some planes to meet demand.
Shares rose more than 2 per cent in premarket trading.
The company reported net income of US$967 million, or $1.27 per share, for the April-June period compared with $941 million, or $1.25 per share, a year earlier.
Revenue jumped 21 per cent to $20 billion from $16.54 billion a year ago.
Analysts polled by FactSet had expected earnings of $1.13 per share on revenue of $19.28 billion.
Defence revenue rose 7 per cent, while revenue in the commercial airplane division jumped 34 per cent. The divisions are roughly the same size, but some observers fear they will go in opposite directions.
Boeing's defence unit is vulnerable to potentially severe military spending cuts in January. The cuts would be automatic unless Congress agrees to an alternative for cutting the deficit. The military would face $492 billion in cuts over a decade, with domestic spending reduced by another $492 billion over 10 years.
But it's clear the unit is holding strong. The second-quarter revenue growth is about the same as Boeing saw in the first three months of the year. Defence contractor Lockheed Martin had reported second-quarter results that surprised Wall Street earlier.
Boeing's commercial airplane unit, meanwhile, is rapidly speeding production and deliveries of its new 787. That will move planes that have been mostly finished, but undelivered, out of inventory and turn them into cash. Boeing is also booking firm orders for its new 737 Max, a redesigned version of its classic 737.
For all of 2012, Boeing Co. now expects to earn $4.40 to $4.60 per share, up from between $4.15 and $4.35. Still, that new forecast is mostly under what Wall Street is banking on. Analysts predict $4.57 per share, on average.
Its shares rose $1.97, or 2.7 per cent, to $74 in premarket trading Wednesday.
News from © The Associated Press, 2012