Bombardier Inc. net profit down in Q1 but revenue soars to US$4.3B

MONTREAL - Bombardier's revenues surged 25 per cent in the first-quarter on higher-than-expected aircraft deliveries, while the aerospace and transportation giant said its CSeries commercial aircraft remains on target for its first flight next month.

Chief executive Pierre Beaudoin told the company's annual meeting that Bombardier is at a "pivotal point" as several of its development projects, including the CSeries will begin to generate revenues and profits.

"This is great news for shareholders," he told shareholders.

Bombardier reported Thursday a profit of US$148 million or eight cents per share in the three months ended March 31, down from US$155 million, also eight cents per share, in the same 2012 period.

On an adjusted basis, net income increased four per cent to US$156 million, up from US$150 million.

That equalled eight cents per share, one penny below analyst expectations.

Revenue totalled US$4.3 billion, up from $3.5 billion.

Beaudoin said the company expects an increase in revenues over the course of the year.

"With our strong overall backlog of $63 billion and state-of-the-art products coming into service in the next few years, we're very well positioned for solid future growth,"' he said.

Bombardier expects its revenues will grow by US$10 billion to US$16 billion over more than five years.

Aerospace president Guy Hachey said last year was a challenging year but the division's long-term prospects are "solid."

"We are resolutely focusing our efforts on holding the inaugural flight of the CSeries aircraft, the CS100, by the end of June," he added.

He said tests required to obtain airwothiness certification have almost been completed.

Bombardier also said a prototype for the new Montreal subway cars should be ready added to the city's network by the end of this year, after months of testing.

The first cars being assembled at its plant in La Pocatiere, Que., are slated to be tested this month, transportation president Andre Navarri told shareholders.

"Even in this period of continuing uncertainty, the world rail market is full of potential and remains resilient, with a stable annual growth rate of 2.8 per cent," he said.

Meanwhile, Bombardier said one unnamed customer facing financial difficulties cancelled its order for three CSeries planes.

However, analyst Cameron Doerksen of National Bank Financial said the move was "immaterial."

"We view management’s confidence in its target at such a late stage in the safety-of-flight testing as a good sign," he wrote in a report.

Bombardier said tests on the critical fly-by-wire system have so far shown no surprises, but Doerksen said the risk of delay remains.

"We would expect any potential delay to be minimal (i.e. not another six months)."

Analyst Walter Spracklin of RBC Capital Markets described the results as "reassuring."

"Overall, investors should be very encouraged by these results," he wrote in a report.

He said the overall results were positive and the transportation division, which building trains, appears to have "turned the corner" as margins were 6.7 per cent, up from four per cent a year ago.

"We were encouraged by the transportation margin expansion that occurred in the first quarter," he wrote.

"This has been a problem area — and while indications were that issues have been resolved — the margin expansion was excellent reaffirmation."