(Adds detail about tax rate, comments from conference call)
By Alwyn Scott
NEW YORK, April 26 (Reuters) - 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 airplane unit.
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 enthusiasm.
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 afternoon trade.
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 research note.
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 $92.5 billion.
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 Reuters I/B/E/S.
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)