Several analysts were pessimistic about Bombardier’s (TSE:BBD.B) second quarter performance, but they may have exaggerated the downside with the C-series airliner delays and business jet division’s slow sales.
Indeed, even as Bombardier was trading over 11 percent lower on Thursday afternoon, allowing investors to buy shares of Canada’s largest industrial conglomerate at a price not much higher than a penny stock (C$1.73/share), for the three months ended June 30, the Montreal company posted a profit of US$0.06 per share on an adjusted basis.
True, this is lower than the US$0.10 per share generated in the same period last year, but it was well above the analyst consensus of US$0.047 per share analysts surveyed by Bloomberg while the company can boast US$4.4 billion in liquidity.
“After five months on the job, I have a better understanding of our challenges and opportunities. We are taking specific action, including the launch of our Bombardier transformation plan, a disciplined approach to cash management, and the strengthening of our leadership team to reshape the company and ensure our long-term success,” said Bombardier’s president and CEO, Alain Bellemare, who took on the role just five months ago.
Adjusted net income was US$145 million against US$192 million in the same quarter of 2014 while revenues totaled US$4.62 billion, down 6% compared to the US$4.89 billion reported a year ago – higher than analysts’ predictions of US$4.62 billion.
During the quarter, Bombardier delivered 47 business jets, nine more than in the same period of 2014 but the number of commercial aircraft delivered dropped from 24 to 19 units.
For the aerospace division, flight test CSeries CS100 continue and the aircraft is said to be on track to begin service in the first half of 2016, said Bombardier in a statement. Lufthansa’s subsidiary, Swiss airlines, will take delivery of its first aircraft in early 2016.
For business aircraft, turnover was 1.8 billion, up 12% on the second quarter of 2014. But the backlog has deteriorated from 8% to 22.2 billion with only eight new orders between April and June, compared to 30 orders last year over the same period.
For the Commercial Aircraft Division, revenue dropped 21% to US$598 million with 19 aircraft delivered, 5 less than the second quarter last year.
As for the transportation division, which has been put on the block for a spinoff, revenue fell by 12% to US$ 2.1 billion while orders increased 18% to US$2 billion for an order backlog valued at 30.4 billion, down 6%.
Bombardier said the filing of financial documents necessary for the IPO of the railway branch will be realized "in the fourth quarter of this year, subject to market conditions."