Bombardier (TSX:BBD.B) Wednesday said its third-quarter earnings were up, but revenues missed analyst expectations as a “sluggish” economy affected its transportation segment. The company also said it will miss its year-end target for the first flight of its CSeries jet by about 6 months.
The plane and train maker said net income rose to $212 million or 12 cents per diluted share, compared to $192 million or 11 cents per diluted share in the year ago quarter.
Revenues came in at $4.3 billion, down from $4.6 billion a year ago.
Analysts polled by Thomson Reuters expected per share earnings of 10 cents on revenues of $4.65 billion.
“Although the economy remains sluggish, our product and geographic diversification have allowed us to continue building a strong backlog of $58.6 billion while investing in new platforms and maintaining stable results,” said president and CEO Pierre Beaudoin.
Overall backlog reached $58.6 billion.
Gross margin, a measure of profitability, fell to 13 per cent from 16 per cent a year earlier.
The company’s aerospace unit posted $2.3 billion in sales, flat from the year-ago period, as the total aircraft delivered fell to 57, compared to 68 a year earlier. Backlog increased by 18.6 per cent to $26.1 billion, compared to $22.0 billion a year ago.
Aerospace recorded 83 net orders, with a book-to-bill ratio of 1.5, compared to 34 during the year-ago period.
The company said its CSeries aircraft development program encountered certain issues, mainly related to some suppliers, and has delayed its first flight.
“Together with our suppliers, we have now fully harmonized all commitments to the program’s schedule,” said Beaudoin.
“Therefore, the CS100 aircraft’s first flight will now occur by the end of June 2013 – a timeline that all parties have agreed is achievable. We will continue to give regular updates on the program, with a more detailed review during the first quarter of next year.”
The timeline for the CS300 aircraft, which Bombardier said represents “a significant portion” of the program’s orders and commitments, remains unchanged with entry-into-service scheduled for the end of 2014.
Revenue at the company’s transportation division slipped to $2.1 billion, compared to $2.3 billion last year. The company said that revenues were mostly affected by a negative currency impact and by the completion of some contracts in Europe and other regions, while major orders received in these regions in the last quarters are still in the start-up phase.
The order backlog totaled $32.5 billion, compared to $31.9 billion a year earlier, due to higher order intake than revenues recorded and the strengthening of foreign currencies versus the U.S. dollar – mainly the British pound, the company noted.
After the end of the quarter, Bombardier announced measures to improve its competitiveness and cost structure in the transportation division. The company said it will close a plant in Aachen, Germany, and reduce direct and indirect personnel by roughly 1,200 employees worldwide, including Aachen.
Bombardier expects to take a charge in the fourth quarter related to the restructuring effort, which it said should not exceed $150 million.