Mixed first-quarter results
Boeing (BA) reported mixed results for the first quarter of 2019 wherein its adjusted EPS matched analysts’ estimates but its revenue fell short. The airplane manufacturer registered a YoY (year-over-year) fall in its first-quarter top and bottom line results.
In the first quarter, the company reported adjusted EPS of $3.16, which was in line with analysts’ estimate. However, its EPS fell 13.2% YoY mainly due to lower revenues and increased costs associated with its troubled 737 MAX series of planes.
Boeing’s first-quarter revenue of $22.9 billion fell marginally short of analysts’ estimate of $23 billion and was down 2% YoY. Lower commercial plane deliveries hurt the company’s top line performance.
The company’s adjusted operating income fell 21% YoY to $2 billion. Its adjusted operating margin contracted 200 basis points to 8.7% due to lower revenue and increased expenses.
Factors causing dismal results
Boeing’s dismal first-quarter performance reflected the ongoing troubles with its 737 MAX planes. The 737 MAX series has faced worldwide grounding after two deadly crashes in less than six months.
Airline operators have denied deliveries of the aircraft until the safety concerns are cleared. During the first quarter, Boeing’s shipments of its 737 series jets fell to 89 from 132 during the same period last year.
Boeing’s 737 series aircraft account for 80% of its total airplane shipments and contribute ~30% of the company’s overall operating profit. Therefore, delays and delivery cancellations have negatively affected the company’s revenues, earnings, and cash flows.
Among the major aerospace and defense contractors (XLI), Lockheed Martin (LMT) and Northrop Grumman (NOC) reported YoY increases of 42.5% and 5.6%, respectively, in their first-quarter earnings. General Dynamics (GD) reported a 3.4% YoY fall in its first-quarter earnings.
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April 24, 2019 at 09:10PM
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