By Doug Cameron and Anne Steele
Boeing Co. reported forecast-beating quarterly earnings alongside guidance that reflects its commitment to boost profits despite swings in aircraft production as it rolls out a series of new models.
The world's largest aerospace company expects revenues to dip this year but the cash flow that has powered its big stock buybacks and dividends was above analysts' expectations, boosting the shares by 2.5% in early trade.
Boeing faces a crucial year as it delivers its first 737 Max jetliner and rolls out a new model of the 787 Dreamliner while prepping for a large planned increase in production even as orders start to slow after a six-year boom.
The company reported a 60% rise in fourth-quarter profits and forecast per-share earnings for 2017 of between $9.10 and $9.30, broadly in line with expectations. The revenue forecast fell short at $90.5 billion to $92.5 billion, based on a small rise in jetliner deliveries from 2016 to between 760 and 765.
Boeing Chief Executive Dennis Muilenburg said on an investor call that he expects new jetliner orders this year to mirror the 668 secured last year, with plans to boost production of its 737 jets on track to rise this year and climb to 57 a month by the end of the decade.
Operating cash flow forecast for 2017 at $10.75 billion was above most analysts' expectations, and helped counter yet another charge to the company's military tanker program.
Boeing will take a $312 million pretax charge on the KC-46A Pegasus program that has already cost the plane maker about $2 billion in write-offs.
The Pegasus tanker is Boeing's largest defense program and has been hit by design and manufacturing issues that have triggered three charges over the past year and left the project more than 40% past its original budget, delaying first deliveries to the U.S. Air Force now expected in August.
The latest charge follows sharp criticism of the cost of military programs by President Donald Trump that drew a commitment from Mr. Muilenburg to cap the cost of the two 747 jets it plans to build to replace the existing Air Force One fleet.
Boeing is building the first tranche of Pegasus refueling jets under a fixed-price deal that leaves it to pay for any cost overruns. It secured a $2.8 billion deal last year for 18 of the planes, based on its 767 passenger jet, and expects to sell an initial 179 to the Pentagon, with a forecast global market for around 400 of the planes.
The first Pegasus planes are due to be delivered in August.
Boeing reported a fourth-quarter profit of $1.63 billion, or $2.59 a share, up from a year-earlier's $1.03 billion, or $1.51 a share.
Excluding items, the company earned an adjusted profit of $2.47 a share, topping analysts' estimates for $2.35 a share. Revenue edged 1.2% lower to $23.29 billion. Analysts had predicted $23.19 billion in sales.
Write to Doug Cameron at email@example.com and Anne Steele at Anne.Steele@wsj.com
(END) Dow Jones Newswires
January 25, 2017 11:03 ET (16:03 GMT)
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