Share value tumbles as Boeing forecasts 2016 earnings below estimates

Shares fell by up to 10% and reached a 52-week low after Boeing announced the Company’s forecast for 2016, figures not helped by the results of the financial performance for Q4 2015. Last week’s announcement that Boeing will be taking a charge for slowing production of the 747-8 certainly contributed to the weaker-than-anticipated profit for Q4 and perhaps paved the way for yesterday’s announcement for expected 2016 production.
In its centenary year the Company expects to deliver 740 to 745 planes, a reduction on 762 produced in 2015, and will also build fewer 737s while it transitions that factory to the upgraded 737 MAX. The Company has forecast 2016 core earnings, excluding certain pension and ancillary costs, between US$8.15 and US$8.35 per share, against an average analyst estimate of US$9.43, according to Thomson Reuters I/B/E/S, while its forecast for approximately US$10 billion in operating cash flow in 2016 has concerned a number of analysts.
Boeing’s net income fell to US$1.03 billion, or US$1.51 per share, in the fourth quarter, from US$1.47 billion, or US$2.02 per share, the previous year. Core earnings dropped to US$1.60 per share from US$2.31 though Wall Street was looking for core earnings of US$1.26 per share, according to Thomson Reuters I/B/E/S. These two figures heavily reflect the impact of the after-tax charge of US$569 million (US$0.84/share) for reducing the 747-8 output, starting September 2016, from 12 planes to 6.
Fourth-quarter revenue fell about 4% to US$23.57 billion where analysts had expected US$23.53 billion, according to Thomson Reuters I/B/E/S.
The Company share value had fallen over US$12.00 at US$115.70 on the New York Stock Exchange, dropping as far as US$115.02. Its 52-week high was US$158.83.
Orders for 203 737 MAX airplanes were placed during Q4, while the 737 MAX has achieved orders of nearly 3,100 since its launch. In addition, during Q4 Boeing has rolled out the first 737 MAX airplane, completed detailed design for the 787-10 Dreamliner and final systems definition on the 777X.
Commercial Airplanes booked 321 net orders during Q4 against the full year’s 768 net orders, so the backlog remains strong with approaching 5,800 airplanes valued at approximately US$432 billion at book prices.