July 19, 2012 / 2:25 PM / in 5 years

UPDATE 4-Textron earnings soar past Wall Street target

* Q2 EPS $0.58 tops analysts' average forecast of $0.44
    * Revenue up 10.7 pct
    * Bell, Cessna post strong sales growth
    * Holds full-year forecast steady
    * Shares up 10.4 percent

 (Adds analyst quote, updates stock action)
    By Scott Malone
    July 19 (Reuters) - Textron Inc blew past Wall
Street forecasts with a near-doubling of its quarterly profit,
helped by strong demand for its Bell helicopters and a pickup in
sales at its Cessna jet unit.
    Its shares soared 10.4 percent to $26.24 on the New York
Stock Exchange on the news, with analysts pointing to
better-than-expected profit margins, particularly at Cessna.
    The world's largest maker of corporate jets, which also
makes EZ-Go golf carts and industrial components, said on
Thursday that its second-quarter profit came to $172 million, or
58 cents per share, compared with $90 million, or 29 cents per
share, a year earlier.
    Revenue rose 10.7 percent to $3.02 billion from $2.73
billion.    
    Analysts on average had looked for earnings of 44 cents per
share on $2.99 billion in revenue, according to Thomson Reuters
I/B/E/S.
    The Providence, Rhode Island-based company has been riding a
wave of strong demand for helicopters, and sales of its Cessna
corporate aircraft have started to pick up after a long torpor.
    Despite the second-quarter beat, Textron held its full-year
profit forecast steady at $1.80 to $2.00 per share. Chief
Executive Officer Scott Donnelly said that reflected the
uncertain economy and the fact that purchases of corporate jets
are strongly linked to business confidence.
    "It is prudent at this point, given the uncertain nature of
the economic and political situation, particularly in the United
States, that we be a little cautious about the second half of
the year," Donnelly said. He said the company's caution
reflected the overall economic outlook, and that it was not
reacting to warning signs in its own order flows.
    "Our confidence in the numbers is now higher and Textron
could clearly exceed its range," said Vertical Research Partners
analyst Jeffrey Sprague.
    He noted that Cessna notched a 4.6 percent operating margin
in the quarter, almost a full percentage point over what he had
forecast.
    Donnelly noted that Cessna CEO Scott Ernest -- who joined
the company in May 2011 -- had spent much of the past year
reorganizing the division to make its managers more focused on
profitability. Both Donnelly, who joined Textron in 2008, and
Ernest previously worked at General Electric Co 's jet
engine unit.
 
    Sales rose 21.1 percent at Bell and increased 17 percent at
Cessna, the company said.
    Cessna booked a large order for its Citation Latitude
business aircraft last month. NetJets committed to buy 25 of the
aircraft with an option to buy another 125, with deliveries to
begin in 2016. NetJets, owned by Warren Buffett's Berkshire
Hathaway Inc, also agreed at the time to buy up to 275
Learjet aircraft made by Canada's Bombardier Inc.
 
    Textron's other rivals include Brazil's Embraer SA
 in corporate jets and United Technologies Corp
 's Sikorsky unit in helicopters.
    Textron's better-than-expected profit comes the day after
diversified U.S. manufacturer Honeywell International Inc
 -- which makes cockpit electronics and engines for small
planes -- also topped Wall Street's forecast.
    At Wednesday's close, Textron shares had risen about 24
percent so far this year, greatly outpacing the 8 percent rise
of the broad Standard & Poor's 500 index.

 (Reporting by Scott Malone in Boston; Editing by Lisa Von Ahn,
Gerald E. McCormick, Dave Zimmerman)

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