(Adds detail about tax rate, comments from conference call)
By Alwyn Scott
NEW YORK, April 26 Boeing Co on Wednesday
reported a 19 percent rise in first-quarter profit and lifted
its full-year profit forecast, as lower taxes offset declining
revenue and lower-than-expected margins in its commercial
Boeing's earnings results beat analysts' expectations. But
its decision to increase its full-year profit forecast by 10
cents reflected a lower tax rate, which tempered investor
The world's biggest plane maker said its effective tax rate
fell about 4 percentage points compared with a year ago due to
higher stock-based compensation.
"We don't see investors giving Boeing much credit for a tax
driven EPS 'beat & raise,'" wrote Robert Stallard, an analyst at
Vertical Research Partners, in a research note.
The company's shares were down 1.1 percent at $181.45 in
Analysts already had expected Boeing's revenue to fall after
the company said earlier this month that it delivered fewer
aircraft in the quarter.
But many expected profit margins at Boeing's jetliner
business to rise more than they did. The 8.5 percent operating
margin Boeing reported was at least half a percentage point
below expectations, JPMorgan analyst Seth Seifman wrote in a
The margin miss was largely the result of $142 million in
unanticipated, pretax costs from Boeing's KC-46 military aerial
refueling tanker program. Boeing charged $120 million to the
commercial airplane business and the remainder to defense.
Boeing Chief Financial Officer Greg Smith said that cost
would not recur in future quarters, but noted the program
remains challenging and subject to possible additional costs.
Boeing's cost-cutting and factory productivity improvements
boosted earnings to $1.45 billion, or $2.34 per share, compared
with $1.22 billion, or $1.83 per share, a year earlier.
Core earnings, which exclude some pension and other costs,
rose to $2.01 per share from $1.74, beating analysts' consensus
estimate of $1.94, according to Thomson Reuters I/B/E/S.
Boeing increased its full-year forecast for core profit to a
range of $9.20 to $9.40 per share. The company did not change
its forecast of delivering 760-765 commercial aircraft in 2017
and also left its revenue target unchanged at $90.5 billion to
Boeing also reported strong cash flow in the typically weak
first quarter, which analysts said should be positive for
investors. Cash flow from operations rose to $2.1 billion from
$1.3 billion, compared with analysts' estimates of $1 billion,
according to Thomson Reuters I/B/E/S.
Revenue fell 7.3 percent to $20.98 billion, missing the
consensus estimate of $21.30 billion, according to Thomson
The decline in revenue came as commercial aircraft
deliveries fell to 169 from 176, and because last year's revenue
figure included delivery of three C-17 military transport
aircraft, a plane Boeing has stopped making.
Deliveries of 737s also dipped as Boeing built 737 MAX 8
jets that it plans to begin delivering this quarter, now that
the plane has regulatory certification.
While Boeing delivered two fewer 777s in the quarter, it
delivered two more 787 Dreamliner planes.
(Reporting by Alwyn Scott. Additional reporting by Ankit Ajmera
in Bengaluru; Editing by Lisa Von Ahn, Bernard Orr)