Boeing Co (NYSE: BA) is in the red this morning after reporting a wider-than-expected loss for its third financial quarter.
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Boeing has been struggling for 19 quarters
Its defense business, in particular, “stunk it up again”, as per Rob Stallard – a Vertical Research Partners analyst. That segment lost $924 million in the recently concluded quarter versus analysts at $400 million loss only.
Boeing has made just $474 million in operating profit out of its defense division over the past nineteen quarters on $120 billion of sales. On CNBC’s “Squawk Box”, Dave Calhoun – the Chief Executive of Boeing said today:
We’ll continue to work our way through these fixed price contracts. We’re not hiding from them. We’ll complete them that will reduce the financial weakness of the business.
But the commercial aerospace business has been even worse with $31 billion of loss and $117 billion in sales since the start of 2019. Boeing stock has lost over 20% in less than three months.
Not all was gloomy in today’s earnings print
On the plus side, Boeing reiterated its guidance for $3.0 billion to $5.0 billion in free cash flow in 2023. That translates to $1.5 billion to $3.5 billion of FCF in the current quarter versus about $1.5 billion in the first three quarter combined, as per the press release.
Boeing delivered seventy 737 aircraft in the third quarter – the lower number in about two years due to the ongoing Spirit AeroSystems’ manufacturing defects. Still, the Chief Executive added:
I love the appointment of Patrick. They have work to do, we get it. But I have a lot of confidence. The agreement gives them breathing room to meet our rate requirements. The economics were a win-win.
Boeing said it remains committed to increasing production to 38 MAX planes per month by year end. The aerospace and defence giant signed a Memorandum of Agreement with Spirit AeroSystems last week as Invezz reported here.
Boeing Q3 earnings snapshot
- Lost $1.64 billion versus the year-ago $3.31 billion
- Per-share loss also narrowed from $5.49 to $2.70
- Adjusted loss printed at $3.26 on a per-share basis
- Revenue jumped 13.5% year-on-year to $18.10 billion
- Consensus was $3.20 a share loss on $18.02 billion revenue
- FCF was negative $310 million versus negative $267 million expected
What else was noteworthy?
A 25% growth in commercial aeroplanes and 8.6% increase in global services revenue was better than expected. Boeing Co did, however, come in short of expectations in terms of defense, space, and security revenue which was up 3.3%.
The multinational now expects to deliver 375 to 400 of its 737 MAX in 2023. Its previous guidance was for 400 to 450 instead. But CEO Calhoun told CNBC today:
The good news is we have our arms around it. By the time we get to the end of the year, we’re going to be running at rates people expect us to run.
Wall Street currently has a consensus “overweight” rating on Boeing stock.
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