(Reuters) - Boeing Co BA.N posted stronger-than-expected results for the third quarter on Wednesday and raised its forecast for the full year as its defense business improved and commercial aircraft deliveries surged.
The company said it earned $1.0 billion, or $1.35 a share, compared with $1.1 billion, $1.46 a share, a year ago. Revenue rose to $20.0 billion from $17.7 billion.
Analysts surveyed by Thomson Reuters I/B/E/S had expected Boeing to post earnings per share of $1.13 for the quarter that ended September 30.
“They were obviously strong in defense, which is certainly good to see,” said Ken Herbert, an analyst at Imperial Capital LLC.
Defense revenue fell 4 percent $7.8 billion, compared with a year ago, but margins widened to 10.5 percent from 10 percent.
Those shifts reflected contraction of defense spending - a growing trend as the United States and Europe cut budgets - but also showed Boeing’s ability to be “very aggressive” in cutting costs, Herbert said. “They’re ahead of the curve compared with their peers.”
Boeing raised its full-year earnings forecast to between $4.80 and $4.95 a share, compared with $4.40 to $4.60 previously. It said revenue for the full year should reach $80.5 billion to $82 billion, due to more sales in the defense, space and security businesses.
The report cheered investors, who sent the stock up 2.6 percent to $74.70 in premarket trading.
“Boeing is getting pretty good at this,” Robert Stallard, an analyst at RBC Capital Markets, wrote in a note to clients.
This was “another trouble-free quarter with no execution issues,” he said.
The commercial aircraft business delivered 22 more jets in the quarter than a year ago, due in large part to 787 deliveries that started a year ago, opening a second 787 assembly line, in South Carolina, and ramping up output of 737 and 777 jets.
The delivery increase drove revenue in the commercial airline business up 28 percent to $12.2 billion.
But Boeing earned less from the jets because many were newer aircraft, which tend to have lower profit margins. The business also earned less from aircraft services, which tend to have higher margins. Overall margins contracted to 9.5 percent from 11.4 percent.
The commercial airplane business “was a little soft on the top line and slightly softer on the margin, but not as weak on margins as feared,” Herbert said.
Reporting by Alwyn Scott; Editing by Gerald E. McCormick and Maureen Bavdek