October 19, 2011
By Alton K. Marsh
Cessna Aircraft delivered 47 new Citation jets in the third quarter, up from 26 deliveries in the same period last year. While there is progress on improving profit margins for several models, particularly for the CJ4, the backlog of orders is now less than a year’s production. Cancellations of orders, once thought to be a problem of the past, continue to lower the delivery numbers. The market continues to be soft and is likely to remain flat going into 2012.
“We’re not back in a world where people lined up,” Textron Chairman and CEO Scott C. Donnelly said. He praised new Cessna President and CEO Scott Ernest for developing a “good cadence” at the company. The CJ4, while showing a better profit margin against high supplier costs, still isn’t where it needs to be, he said. The CJ4 is on a two-year diet to reduce costs.
Revenues increased $236 million, reflecting higher jet volume. The Cessna backlog at the end of the third quarter was $2.2 billion, down $359 million from the end of the second quarter of 2011.
Bell Helicopter revenues increased $69 million in the third quarter from the same period in the prior year. Bell delivered nine V-22 Ospreys, seven H-1s, and 26 commercial helicopters in the quarter compared to seven V-22s, five H-1s, and 24 commercial units in last year’s third quarter.
Bell’s backlog at the end of the third quarter was $6.4 billion, down $588 million from the end of the second quarter 2011, reflecting military deliveries during the quarter, as well as a $781 million dollar reduction in the backlog, primarily to correct an error made in the fourth quarter of 2009 which recorded as backlog the full value of a V-22 contract rather than Bell’s proportionate share.
Overall, Textron reported third quarter 2011 income from continuing operations of $0.45 per share, compared to a loss from continuing operations of $0.17 per share in the third quarter of 2010. Last year’s result included $0.30 per share in special charges.
“Third quarter results reflected good execution and cost performance at Bell and Cessna, including continued success in selling commercial aircraft in a tough environment,” Donnelly said. “We believe this reflects the strength of our brands and investments we are making in new products, aftermarket services and sales capabilities.”
The company is now forecasting 2011 earnings per share from continuing operations of $1.05 to $1.15, up from previous estimates of 90 cents to $1 per share.
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