UPDATE 4-Boeing beats 2nd-qtr profit estimates, raises forecast

Wed Jul 25, 2012 9:40pm IST

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* Boeing Q2 EPS $1.27 vs Wall Street view $1.12
    * Revenue $20.0 bln vs analyst view $19.4 bln
    * Higher plane deliveries, defense sales boost profit
    * Shares up 2.4 pct


    By Bill Rigby
    SEATTLE, July 25 (Reuters) - Boeing Co reported a
greater-than-expected 3 percent increase in second-quarter
profit and raised its full-year earnings forecast on Wednesday
as rising airplane deliveries and defense sales offset higher
pension costs.
    The planemaker and defense contractor is rapidly ramping up
production to meet growing demand for new, fuel-efficient planes
and is set to overtake rival Airbus in plane deliveries
this year. At the same time, it is weathering cuts in U.S.
defense spending.
    "This was a good quarter from Boeing," said RBC Capital
Markets analyst Robert Stallard. "Where Boeing has arguably
beaten is on defense, where expectations have been
understandably low."
    Its shares rose 2.3 percent in midday trading, edging into
positive territory for the year.
    Boeing sought to restrain Wall Street enthusiasm however,
with Chief Executive Jim McNerney warning that "global economic
growth continues at a slow pace (and) uncertainties remain," in
a slide presentation for financial analysts.
    The Chicago-based company said quarterly profit increased to
$967 million, or $1.27 per share, from $941 million, or $1.25
per share, in the year-ago quarter.
    Wall Street expected earnings of $1.12 a share, on average,
according to Thomson Reuters I/B/E/S.
    Revenue jumped 21 percent to $20 billion, boosted by
commercial aircraft and military sales, topping analysts'
average estimate of $19.4 billion.
    Boeing's commercial plane unit, based in the Seattle area,
reported a 34 percent increase in sales to $11.8 billion, while
defense unit sales were up 7 percent to $8.2 billion, surprising
some on Wall Street who had played down prospects for growth as
the Pentagon slashes budgets. 
    Leading U.S. defense contractors Lockheed Martin Corp
 and Northrop Grumman Corp also reported
better-than-expected earnings and raised full-year forecasts
this week. 
    The gains in both of Boeing's main units offset a 52 percent
jump in pension costs to $593 million. 
    
    ON TRACK FOR NO. 1 SPOT      
    Boeing delivered 150 commercial planes in the quarter, up
from 118 a year ago -- a key number for profit as most of the
payments from a customer come on delivery.
    Boeing is speeding up production of all its major models and
is now delivering its new carbon-fiber 787 Dreamliner to
customers after years of delays.
    With higher deliveries and resilient defense sales, Boeing
raised its forecast for full-year earnings to $4.40 to $4.60 per
share, up from a range of $4.15 to $4.35. That is in line with
the $4.56 per share that analysts' expect.
    The company stood by its forecast to deliver a record 585 to
600 commercial planes this year. Airbus, which has led the
market in deliveries for the past few years, is targeting 570
commercial deliveries for 2012. Its parent EADS is due
to report its own earnings on Friday.
    Boeing also expects to win the annual order race for the
first time since 2006 as it catches up with demand for revamped
medium-haul jets.
    Former Boeing commercial chief Jim Albaugh last month
predicted 1,000 total jetliner sales in 2012, compared with
Airbus' target of 600-650. 
    The U.S. planemaker took a large step in that direction on
Wednesday, as Aeromexico announced an $11 billion
commitment to buy 90 737s and 10 787s. 
    Boeing shares rose 2.3 percent to $73.68 on the New York
Stock Exchange.
    At Tuesday's close, the shares were down almost 2 percent so
far this year, compared with a 2 percent gain in the Standard &
Poor's aerospace index and 6 percent gain for the
Standard & Poor's 500 index.
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