(Adds CEO comments, share price, financial details, industry background)
By Allison Lampert
MONTREAL, July 28 (Reuters) - Canada’s Bombardier Inc beat market expectations on earnings before interest and tax on Friday, helped by better margins at its train making unit, sending its shares up as much as 6.2 percent.
Bombardier also raised the bottom end of its full-year forecast for EBIT before special items by 9.4 percent, for a new range of $580 million to $630 million.
Bombardier Chief Executive Alain Bellemare reiterated plans to deliver about 30 CSeries single-aisle jets in 2017, which use GTF engines by Pratt & Whitney.
He declined to comment directly on reports that Bombardier is in the final stages of talks with Germany’s Siemens to create two separate joint ventures for both companies’ signaling and rolling-stock divisions.
Bombardier, nevertheless, is watching the industry trend of rail consolidation, with the emergence of Chinese rival CRRC as a strong competitor, he told analysts.
“As a result of this, we have been looking at what are the real strategic options to make our rail business strong moving forward from a scale standpoint, from an efficiency standpoint, from a technology standpoint.”
For the second quarter, Bombardier reported EBIT before special items of $164 million, up 55 percent from a year earlier. That beat analysts’ consensus of $134 million, according to analysts’ estimates.
The Montreal-based plane and train manufacturer also raised its EBIT margin guidance before special items for its transportation and business jet divisions to approximately 8 percent for the year, up from 7.5 percent.
Bombardier, which is in the middle of a five-year turnaround plan after facing a cash crunch in 2015, also reported its first quarterly profit in two years. Bombardier shares were trading up 6 percent at C$2.56 late on Friday morning.
Adjusted net income, which excludes some items, was $39 million, or 2 cents per share, in the second quarter, compared with a loss of $83 million, or 6 cents per share, a year earlier.
Analysts on average had expected Bombardier to lose 1 cent per share, according to Thomson Reuters I/B/E/S.
Brazilian rival Embraer SA also reported a return to profit in the second quarter on Friday as it reduced costs and ramped up deliveries of narrow body E-Jets.
Bombardier’s revenue fell 5 percent to $4.10 billion in the quarter because of a decline in sales in its business aircraft and commercial aircraft segments.
Sales in Bombardier’s transportation unit, its biggest, rose to $1.98 billion from $1.96 billion. (Additional reporting by Yashaswini Swamynathan in Bengaluru; Editing by Steve Orlofsky and Matthew Lewis)