April 2, 2009 / 2:10 PM / in 9 years

UPDATE 3-Bombardier profit rises, more job cuts planned

* Q4 EPS $0.17 vs $0.12 a year earlier

* Cutting 10 percent of 30,000 aerospace jobs

* Business plane deliveries seen 25 percent lower

* Shares up 10 percent as transportation revenue rises (Adds detail from conference call, updates stock price. In U.S. dollars unless noted)

By Susan Taylor

OTTAWA, April 2 (Reuters) - Bombardier Inc (BBDb.TO) reported a 42 percent jump in quarterly profit on Thursday on a strong performance by its transportation arm even as recession led the company to scale back expected business-jet deliveries and announce sweeping job cuts in its aerospace unit.

Shares of Bombardier climbed 10 percent after the world’s No. 1 passenger train maker and No. 3 civil aircraft manufacturer said transportation revenues rose 12.5 percent in the quarter ended Jan. 31, offsetting a drop by its aerospace unit. Earnings for the quarter easily topped the average estimate of analysts.

The Montreal-based company said it would lay off 3,000 workers in Canada, Northern Ireland, United States and Mexico at the end of 2009, resulting in severance costs of about $30 million. The cuts are on top of nearly 1,400 layoffs announced Feb. 5 when the company said it would reduce Learjet and Challenger plane production.

“It appears that while the aerospace group is looking at a difficult market over the next year or two, the transportation business is moving from strength to strength,” said Dundee Capital Markets analyst Richard Stoneman.

As evidence, he pointed to the company’s announcement on Thursday that it had won a 188 million euro ($249 million) order from National Express in England to supply and maintain 30 Electrostar trains.

Demand for business planes deteriorated rapidly in the last six months of 2008 and is likely to remain weak for the foreseeable future, Bombardier said.

“The extent and the severity of the global downturn are unknown and the situation remains volatile,” Chief Executive Pierre Beaudoin said during a conference call.

The company now expects to deliver 25 percent fewer business planes this fiscal year, but repeated its forecast for a 10 percent increase in commercial plane delivery.


Net income rose 42 percent to $309 million, or 17 cents a share, in the fourth quarter ended Jan. 31 from $218 million, or 12 cents, a year earlier.

Revenue rose to $5.4 billion from $5.3 billion.

Analysts had expected, on average, earnings of 14 cents a share and revenue of $5.2 billion, according to Reuters Estimates.

UBS analyst Fadi Chamoun said in a note earnings easily beat his forecast of 15 cents a share on stronger-than-expected aerospace results and resilience in the transportation unit.

Bombardier shares added 31 Canadian cents to C$3.35 on the Toronto Stock Exchange on Thursday. That is still about 60 percent below the stock’s 2008 high of C$8.97 on June 5, before the global economy soured.

Quarterly aerospace-unit revenue slipped to $2.8 billion from $2.9 billion. Business plane deliveries fell 19 percent to 93 aircraft, and orders in the quarter sank to 6 from 213 a year earlier as the economic crisis weighed on demand.

Until markets return to normal, aerospace EBIT margins will suffer, said Bombardier said. The company maintained its target of a 12 percent EBIT margin by fiscal 2013.

Revenue in the transportation business rose 12.5 percent to $2.7 billion, reflecting higher demand for trains in Europe.

New orders in the segment fell to $2.6 billion from $3.9 billion a year earlier, hurt by lower demand for services in Europe, overall weakness in North America, and a negative currency impact.

With the equivalent of 2.5 years worth of revenue already in its backlog, the company said the recession should have a limited impact on its transportation unit. Bombardier repeated its goal to improve the unit’s EBIT margin to 6 percent in 2010.

The company’s overall backlog at the end of the quarter slipped to $48.2 billion from $53.6 billion a year earlier, reflecting the impact of weakening foreign currencies against the U.S. dollar.

Bombardier had $3.5 billion in cash and cash equivalents and no significant long-term debt maturing before fiscal year 2013. ($1=$1.24 Canadian) (Reporting by Susan Taylor, additional reporting by Esha Day in Bangalore; Editing by Frank McGurty)

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