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Boeing boosts 2014 profit forecast after strong Q2

US aerospace giant Boeing on Wednesday raised its full-year profit forecast after earnings soared 52 per cent in the second quarter, lifted by increased jetliner deliveries.

WASHINGTON: US aerospace giant Boeing on Wednesday raised its full-year profit forecast after earnings soared 52 per cent in the second quarter, lifted by increased jetliner deliveries.

Boeing posted net profit of US$1.65 billion for the April-June quarter, up from US$1.09 billion in the year-ago quarter.

Core earnings per share rose 45 per cent to US$2.42, widely topping the US$2.01 expected by analysts.

The company delivered 181 commercial aircraft in the second quarter, a solid 7.1 per cent increase from 169 planes a year earlier amid robust demand from airlines.

Boeing raised its 2014 full-year forecast to core earnings per share between US$7.90 and US$8.10, from US$7.15 to US$7.35, citing in part its "positive market outlook."

The improved earnings outlook, with a midpoint of US$8.00, beat market estimates of US$7.67. The Chicago-based company had also raised its profit forecast at the end of the first quarter.

"Strong operating performance across our production programs and services businesses drove revenue and earnings-per-share growth and healthy operating cash flow," Boeing's chairman and chief executive Jim McNerney said in a statement.

"With 783 new commercial airplane orders to date this year and significant contracts in the quarter for military aircraft and satellites, our backlog remains large and diverse."

The second-quarter results included a total of US$524 million in tax benefits.

They also included an unexpected US$272 million after-tax charge to reflect additional work on the huge KC-46A Tanker programme for the US Air Force.

Boeing explained the charge was due to higher spending to resolve engineering and systems installation issues on its tanker test aircraft to keep the programme on schedule.

McNerney said "the issues are well understood" and the company remains on track to begin flight testing fully provisioned tankers in the first part of next year.

In 2011, Boeing won the US$30 billion contract to supply 18 tankers by 2017, beating a bid by European rival Airbus, and plans to deliver the first tanker in early 2016.

Boeing expects to build 179 tankers by 2027 if the US Air Force exercises all options under the contract.

Despite beating profit expectations, shares in Dow component Boeing tumbled 2.3 per cent to US$126.71 as the tanker charge raised concerns.

"It is worrying that Boeing is booking a charge of this magnitude at a relatively early stage in this long-term programme, particularly given recent assurances from management that everything was going to plan," said Robert Stallard, an analyst at RBC Capital Markets.

During the second quarter, Boeing's commercial aircraft division booked 264 net orders, bringing the orders backlog to 5,200 airplanes, valued at a record US$377 billion.

Boeing had a net 499 new orders for the first half of the year, outpacing European rival Airbus's 290 orders. Boeing also was ahead in deliveries, at 342, compared with 303 for Airbus.

Leading Boeing's second-quarter deliveries was the best-selling single-aisle 737 aircraft, with 124 deliveries. Next were 30 deliveries of the new 787 Dreamliner, the high-tech plane that was grounded globally for more than three months last year due to lithium-ion battery problems.

Boeing reiterated that it expected to deliver between 715 and 725 jetliners this year, after a record 648 deliveries in 2013.

Boeing, in early July, raised its 20-year forecast for global jetliner demand by 12.5 per cent, to US$4.5 trillion, assuming that airline traffic would grow by five percent each year.

During the month Emirates Airline and Qatar Airways finalised orders totalling 200 777X airplanes, and British low-cost carrier Monarch Airlines committed to buy 30 737 MAX planes.

Second-quarter revenues at the world's largest aerospace company rose one per cent to US$22.05 billion, missing estimates of US$22.23 billion.

The commercial aircraft division scored a 5.0 per cent rise in revenues, to US$14.30 billion.

Revenues at the smaller defence, space and security division fell 5.4 per cent to US$7.75 billion, reflecting lower US defence spending in the wake of budget cuts.

Boeing said it repurchased 11.4 million shares for US$1.5 billion during the second quarter and raised its dividend payments by about 50 percent.

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