Bombardier profit down as it wins big new order
MONTREAL–Aircraft and train manufacturer Bombardier Inc. (TSX: BBD.B) saw its profits fall 26 per cent in its summer quarter amid harsh economic conditions which triggered recent layoffs because of a slumping market for regional and corporate jets.
But the Montreal industrial giant said it managed to keep revenues at year-ago levels and announced a multimillion-dollar contract for its aerospace division Thursday.
Bombardier, which keeps its books in U.S. dollars, reported net earnings of US$168 million or nine cents a share for the quarter ended Oct. 31. That was down from year-ago profit of $226 million or 12 cents per share.
Revenues totalled $4.6 billion for the quarter, staying the same from 2008 levels, in line with analysts' expectations.
Bombardier said it was feeling the effects of the harsh economic environment particularly on its aerospace side, which offset progress in its rail division.
The company makes corporate jets bought by companies and regional aircraft that are used by the world's airlines.
`The economic environment remains difficult and continued to impact our activities and financial results, especially in Bombardier Aerospace," chief executive Pierre Beaudoin said in the company's earnings report.
`Both groups continue to look for ways to reduce overall costs in their operations and improve their working capital, while maintaining investments in new product development. We will be ready when the economy recovers"
Bombardier Aerospace revenue totalled $2.1 billion, dipping from $2.3 billion in 2008.
The company said the business aircraft market was still experiencing difficulties, although some signs of stabilization were starting to emerge with net orders for the quarter returning to a positive position for the first time since the third quarter in 2008.
Commercial aircraft also saw a low level of order intake during the quarter, reflecting the drop in demand in the sector pay day loans.
Bombardier delivered 61 aircraft overall during the quarter ended Oct. 31, compared to 80 during the same period last year.
Bombardier's rail division, however, continued to improve its revenues, profitability and order intake.
Bombardier Transportation revenue rose 11 per cent to $2.53 billion. However, freight locomotives and service segments saw a lower level of activity than past quarters.
The Montreal-based company announced more than 700 layoffs last week but said Wednesday that number would be reduced by about 100, leaving about 600 Bombardier workers facing layoff.
Bombardier also announced Thursday it had signed a contract worth US$779 million with AMR Eagle Holding Corp, the parent company of American Eagle Airlines for 22 CRJ700 regional jets.will acquire 22 CRJ700 regional jetliners.
The transaction represents the conversion of 22 options held by the airline into a firm contract.
"This would be a major order for us at any time, but achieving it during the prevailing tough economic times makes it all the more significant," said Gary Scott, president of Bombardier's commercial aircraft unit.
In early trading Tuesday on the TSX, Bombardier shares fell 10 cents to $4.59, a drop of 2.1 per cent.
Bombardier, which began as a maker of tracked snow vehicles in rural Quebec in the 1930s, has grown into one of Canada's biggest industrial companies, with operations around the world and US$19.7 billion of revenues for the fiscal year ended Jan. 31, 2009.
The company employed about 67,000 people at the end of its last fiscal year and had major operations in Canada, the United States, Germany and Ireland.
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