Boeing offers weak 2016 outlook; shares plunge
Shares of the aerospace giant fell a sharp 7.7 percent to $118.20 after it projected 2016 commercial aircraft deliveries of between 740 and 745, down from 762 in 2015 and the first decline since 2010.
Boeing said it expects flat to slightly lower 2016 revenues and core earnings per share of $8.15-$8.35, well below the $9.43 expected by Wall Street analysts. The Boeing outlook came at an anxious moment for global markets, with stocks in retreat in early 2016 due to worries about slowing Chinese growth and low oil prices.
Boeing offered little elaboration on the weaker outlook, with chief executive Dennis Muilenburg saying business remains broadly strong. "With clear strategies and strong positions in our markets, a large and diverse order backlog worth nearly $500 billion, and multiple additional production rate increases planned yet this decade, we are well positioned for profitable growth and higher cash flow as we move into our second century in business," Muilenburg said.
Boeing to cut down on production
The outlook comes on the heels of Boeing's announcement January 21 that it was sharply cutting production of the 747-8 freighter due to falling demand in the air cargo market. Boeing said it was trimming output on the cargo planes by half to one plane every two months. It also took a $569 million charge against fourth-quarter earnings.
There has also been speculation Boeing will slow production of its long-range 777 aircraft. The Seattle Times, citing an unnamed executive with a Boeing customer, reported that Boeing was expected Wednesday to announce the 777 cutback on Wednesday.
Boeing said fourth-quarter net income was $1.0 billion, down 30 percent from the year-ago period. Sales fell 3.7 percent to $23.6 billion. Commercial deliveries for 2015 came in at a record 762 aircraft, but net orders for new commercial aircraft dropped to 768 last year from 1,432 in 2014.
Source: AFP