TORONTO (Reuters) - Profit at Bombardier Inc (BBDb.TO) fell 31 percent in the latest quarter as the number of corporate jet cancellations surged due to the recession, but weakness in the aerospace market may have bottomed out, the company said on Wednesday.
The world's No. 1 passenger train maker and No. 3 civil aircraft manufacturer said it had 61 business aircraft cancellations during its first quarter. That was offset by 20 new business aircraft orders, and 50 new commercial aircraft orders, for a net of nine aerospace orders.
A year earlier, the company reported 118 aerospace orders.
"The first-quarter results for fiscal 2010 followed the trend that emerged in the preceding quarter and therefore we continue to see an abnormal number of deferrals and cancellations," Guy Hachey, president and chief operating officer of Bombardier Aerospace, said at the company's annual shareholders meeting.
In a conference call with analysts, Hachey said the company had 25 jets without buyers, known as "whitetails", due to cancellations. He said Bombardier was in active discussions with several potential buyers for some of the planes.
"In the last six to seven weeks, we've seen a bit more interest in the market, not that it's been buoyant, but certainly, compared to what we were seeing in January, February and March, April and May were much more active months."
Bombardier maintained its view that corporate jet deliveries would be 25 percent lower for the year, while it expects commercial aircraft deliveries to rise by 10 percent.
In early April, the company said it would cut 3,000 jobs, on top of nearly 1,400 layoffs announced earlier in the year.
Chief Executive Pierre Beaudoin said in the conference call that he thought the layoffs and production cuts were enough to adjust the company to meet the weaker demand.
While he would not definitively say the aerospace market had reached bottom, he said there were signs it may have.
"There is some indication, anecdotal, as well as within the statistics, that things may have bottomed out."
Net income at Bombardier fell to $158 million, or 9 cents a share, in quarter ended April 30. That compares with earnings of $229 million, or 12 cents a share, a year earlier.
Analysts had expected a profit of 10 cents a share, according to Reuters Estimates.
The results helped push down shares in Bombardier by 33 Canadian cents, or 8.5 percent, to C$3.54 on the Toronto Stock Exchange.
Revenue fell 6.7 percent to $4.47 billion. Analysts on average had expected $4.51 billion.
The company's overall backlog was $47.4 billion, compared to $55.5 billion a year ago.
Montreal-based Bombardier said first-quarter aircraft deliveries totaled 75 units, compared with 87 for the same period a year ago. It delivered 43 business aircraft, compared with 58 a year earlier, along with 31 regional jets, up from 28, and one amphibious aircraft.
UBS Investment Research analyst Fadi Chamoun said Bombardier's aircraft deliveries were stronger than the 69 deliveries expected by UBS.
Railway unit Bombardier Transportation reported new orders worth $1.2 billion for the first quarter, compared with $2.4 billion a year ago, mainly due to lower orders for rolling stock in North America and Europe, and lower demand for services in Europe.
Chamoun maintained a "buy" rating on Bombardier's stock, with a C$5 price target.
Richard Stoneman, an analyst at Dundee Capital Markets, also maintained a "buy" recommendation, with a one-year price target of C$7 a share.
Versant Partners maintained a "neutral" rating Bombardier with a price target of C$3.90.
"With a rebound in the biggest profitability driver for Bombardier (business jets) still probably at least two years away, there is no rush to buy the stock," said Versant analyst Cameron Doerksen.
Additional reporting by Bhaswati Mukhopadhyay in Bangalore; editing by Rob Wilson