Fewer aircraft deliveries and costly programme charges lowered Boeing’s full-year earnings by 5% to $4.9 billion, despite a positive swing in the fourth quarter.
Overall revenues declined by 2% year-over-year to $94.6 billion last year, partly reflecting 14 fewer aircraft deliveries compared to 2015 when Boeing shipped 762 aircraft.
Boeing’s overall operating margin also dropped by 1.5 percentage points from 2015 to 2016. In the commercial airplanes division, operating margin dropped by 3 percentage points to 4.8%, as earnings from operations plummeted 39% during the full year.
In a press release, Boeing highlighted one bright spot on the balance sheet as operating cash flow, which climbed 12% year-over-year to $10.5 billion. Subtracting spending on property, plants and equipment, free cash flow in 2016 totalled $7.89 billion.
“Looking forward our team is intent on accelerating productivity and programme execution to deliver increasing cash and profitability from our large and diverse order backlog of nearly $500 billion, standing up our new integrated services business and capturing an even greater share of the growing global aerospace market,” says Boeing chairman, president and chief executive Dennis Muilenburg.
Overall cash and marketable securities stood at $10 billion at the end of the fourth quarter. Total consolidated debt also amounted to $10 billion.
Although revenue declined by 1% in the fourth quarter to $23.3 billion, Boeing ended the year ona high note. Earnings from operations rose 88% year-over-year to $2.18 billion, resulting in a 4.5 percentage point improvement in operating margin to 9.4%.
Boeing Commercial Airplanes reported that deliveries also rose 2% in the fourth quarter to 185, but revenues grew slower by 1% to total $16.2 billion. Operating margin within BCA improved by 5.6 percentage points in the fourth quarter, equaling 9.1% compared to 3.5% in the same period a year ago.
As expected, Boeing forecasts a rebound in commercial aircraft deliveries in 2017, despite slowing output on the 777 programme. Increasing deliveries of 787s and 737s, including the introduction of the 737 Max in the second quarter, should lead to 760-765 deliveries this year. Despite higher deliveries, Boeing expects revenues to shrink again, dropping to between $90.5 to $92.5 billion for the full year. After peaking at $66 billion in revenues in 2015, Boeing Commercial Airplanes expects revenues to decline to between $62.5-63.5 billion this year. But overall profitability is expected to bounce back, with BCA’s operating margin forecasted between 9.5-10%.
Boeing ultimately hopes to achieve operating margins in the mid-teens by the end of the decade.
Source: Cirium Dashboard
