Newspaper article The Canadian Press

Bombardier Posts Lower Profit in Q4, Disappoints Street on Margins for 2012: Bombardier Posts Lower Profit in Q4

Newspaper article The Canadian Press

Bombardier Posts Lower Profit in Q4, Disappoints Street on Margins for 2012: Bombardier Posts Lower Profit in Q4

Article excerpt

MONTREAL - Shares of Bombardier (TSX:BBD.B) dropped more than nine per cent Thursday after the Montreal-based airplane and train maker's profit margins failed to meet expectations and it announced lower aircraft deliveries than expected.

The widely held stock fell 45 cents, or 9.47 per cent, to $4.30 on the Toronto Stock Exchange in very heavy volume of almost 26.5 million shares.

But president and CEO Pierre Beaudoin told analysts he expects aerospace margins to improve as the year progresses.

"Our EBIT (earnings before interest and taxes) margin will be five per cent and it will be better in the second half of the year than it is in the first half of the year," Beaudoin said during a conference call.

"This is essentially the same guidance we gave last year. We expect significant cash flow from operations in order to fund our $2 billion in new programs and development."

Desjardins analyst Benoit Poirier said he was disappointed with lower margins in the aerospace division since he had estimated them at seven per cent and noted the lower margin will impact Bombardier financially.

"Each one per cent change in margin has a four-cent U.S. impact on EPS," Poirier said in a research note.

"The company has also withdrawn its long-term aerospace margin guidance of 10 per cent."

The drop in Bombardier's stock came after the company reported a lower net income of US$214 million or 12 cents per share for the fourth quarter ended Dec. 31. That's compares with $295 million or 16 cents per share in the year-earlier period.

However, the results reflected a change in the reporting period for Bombardier's aerospace division, which shifted its year-end to Dec. 31 from Jan. 31, shortening the reported quarter by a month. The move brought the reporting period in line with Bombardier's transportation operations, which already report its year-end on Dec. 31.

Quarterly revenues totalled $4.3 billion, down from $5.6 billion in the previous year.

In its outlook, Bombardier Aerospace said it expects to deliver a total of 235 aircraft -- 180 business aircraft and 55 commercial aircraft in 2012. Deliveries totalled 245 in 2011, including 163 business aircraft. …

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