December 4, 2008 / 12:05 PM / in 9 years

UPDATE 2-Bombardier earnings beat estimates, but orders sag

* Q3 net income 14 cents per share vs. 5 cents a year ago

* Revenue up 8 percent at $4.6 billion

* Shares rise more than 6 percent (In U.S. dollars unless noted. Changes dateline from NEW YORK; adds analysts’ comments, details, stock activity)

By John McCrank

TORONTO, Dec 4 (Reuters) - Bombardier said on Thursday that quarterly earnings more than doubled, helped by an 8 percent rise in revenue, but new orders for both airplanes and trains fell as tough economic conditions weighed on demand.

Net income rose to $245 million, or 14 cents per share, in the third quarter ended on Oct. 31 from $91 million, or 5 cents per share, a year earlier.

The results beat the analysts’ average forecast by 2 cents per share, according to Reuters Estimates.

Revenue at the world’s No. 1 passenger train maker and No. 3 civil aircraft manufacturer rose to $4.6 billion from $4.2 billion.

Bombardier said it had achieved its goal to improve its aerospace profit margin before interest and taxes to 8 percent and was now aiming for 12 percent by fiscal year 2013.

“The surprise out of this is that they’ve opted to increase the target on margins,” said Dundee Securities Corp analyst Richard Stoneman. “That suggests that earnings are going to increase.”

Montreal-based Bombardier said it expected to deliver a slightly higher level of aircraft, in aggregate, this fiscal year, compared with the 361 deliveries last year.

The company said commercial aircraft deliveries from its aerospace division fell by a third to 22 as customers requested them to be deferred to the fourth quarter.

Business aircraft deliveries were steady at 57 aircraft, but orders sank to 48 from 112 a year earlier as the economic crisis weighed on demand.

Research Capital Corp analyst Jacques Kavafian said Bombardier’s business jet orders came in slightly higher than he had expected. While that segment is a concern because of the weakened global economy, he said Bombardier’s transportation unit, which makes railroad cars and locomotives, was well poised to pick up the slack.

“Governments will probably increase their spending on infrastructure (to combat the economic downturn),” he said. “That includes trains and metros, and that’s good for Bombardier.”

While Bombardier said revenue at the transportation segment was strong during the quarter, new orders fell to $2.8 billion from $3.1 billion a year earlier.

The company said its overall backlog slipped to $51.9 billion, or an average of 2.7 years of revenue, from $53.6 billion at the end of January, as the U.S. dollar’s strength weighed on the transportation segment.

Bombardier said it had $3.3 billion in cash and cash equivalents and no significant long-term debt maturing before fiscal year 2013.

“Although it is too early to assess the severity and duration of the economic slowdown and its potential impact on both businesses, we are confident in our future, having taken significant steps in the past few years to strengthen our operations and financial position,” said Chief Executive Pierre Beaudoin.

Bombardier shares were up 6.2 percent at C$4.13 on the Toronto Stock Exchange. That is still down 54 percent from the stock’s 2008 high of C$8.97 on June 5, before the global economy worsened.

“You’ve got people predicting the end of the world, and when they (Bombardier) say that they expect aircraft deliveries to be up slightly from last year, that they expect margins to increase, it’s hard to understand why the stock has been cut in half,” said Dundee Securities’ Stoneman. (Additional reporting by Christopher Kaufman in New York; Editing by Lisa Von Ahn)

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