Boeing Co. forecast a smaller 2012 profit as rising pension expenses and declining U.S. defense spending erode gains from jetliner production increasing to record levels.
Full-year net income will be $4.05 to $4.25 a share, Chicago-based Boeing said in a statement today. That trailed the $4.89 estimate of 27 analysts surveyed by Bloomberg. Sales may be in a range of $78 billion to $80 billion, compared with the average projection of $78.4 billion.
Pension costs “are a material event, but not unexpected,” said Joel Levington, head of corporate credit at Brookfield Asset Management Inc. in New York. “What is different with Boeing versus its peers is that the market has overlooked these issues in favor of the growth in commercial aerospace.”
Airliner deliveries should climb to a range of 585 to 600 from 477 in 2011, helping Boeing in its bid to reclaim the top spot in commercial-jet production lost to Airbus SAS in 2003. Boeing is boosting output by more than 60 percent in four years through 2014 to meet demand for more fuel-efficient planes.
The shares fell 1.8 percent to $74 at 9:13 a.m. before regular New York trading.
“With a record backlog and intense focus on productivity, we are well positioned to deliver growth and increased competitiveness, even as we face constrained U.S. defense spending and pension headwinds,” Chief Executive Officer Jim McNerney said in the statement.
Pension Expense
Pension costs will probably rise to $2.6 billion this year from $1.6 billion, an increase of 83 cents a share, Boeing said.
Adjusting for that expense, an increased tax cost of 12 cents, a 6-cent impact from share dilution, and a 53-cent tax settlement in 2011, earnings would be $5.06 to $5.26 this year, said Chaz Bickers, a spokesman.
Net income in 2011 was $4.02 billion, or $5.34 a share, on revenue of $68.7 billion, Boeing said. That pushed earnings past the top of the increased range the company gave in October of $4.30 to $4.40 a share.
Fourth-quarter net income was $1.84 a share. Adjusted earnings were $1.32, exceeding analysts’ $1.01 projection. Sales were $19.6 billion.
The company came up short in meeting its 2011 forecast for delivering its two newest models, the 787 Dreamliner and the 747-8 jumbo jet, both of which entered service last quarter after years of delays. That means those deliveries will shift to 2012.
Newest Planes
Boeing said today it will hand over 70 to 85 of the two new models this year, half of which will be Dreamliners.
The backlog rose to more than 3,700 planes valued at a record $296 billion at the end of December, from $273 billion in September. Boeing Commercial Airplanes President Jim Albaugh has said he would like to whittle the number of unfilled orders to three or four years’ worth of production, so that airlines don’t have to wait so long between ordering jets and receiving them.
While Airbus SAS is also increasing output, Albaugh said in November he expects by next year to once again be the leader. Toulouse, France-based Airbus delivered a record 534 aircraft in 2011 and predicted shipments would rise to 570 this year.
Boeing is counting on the popularity of the 787, the first composite-plastic airliner, and the 737 MAX, an upgraded version of the world’s most widely flown jet. The company is building 2.5 Dreamliners a month now, with a goal of 10 a month by the end of 2013, and expects MAX deliveries to start in 2017.
Segment Margins
The commercial-jet unit’s profit margin will fall this year to a range of 8.5 percent to 9 percent, from 9.7 percent in 2011, as the new models initially have lower margins, Boeing said. Revenue will rise to as much as $49.5 billion, from $36.2 billion.
Earnings from operations in the fourth quarter surged 56 percent from a year earlier to $981 million, on sales of $10.7 billion.
The planemaker’s defense division is looking for spending cuts and more international sales as the U.S. pares future arms budgets. Boeing said this month it is leaving Wichita, Kansas, where it has built military planes since 1929, and moving some of the work to cheaper locations.
The defense unit’s profit gained 6 percent last quarter to $865 million, as sales rose 4 percent to $8.47 billion.
The division’s margin this year will be more than 9 percent, on revenue of as much as $30.5 billion, Boeing said. Last year the margin was 9.9 percent on sales of $32 billion.
--Editors: Ed Dufner, John Lear
To contact the reporter on this story: Susanna Ray in Seattle at sray7@bloomberg.net
To contact the editor responsible for this story: Ed Dufner at edufner@bloomberg.net
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