Boeing Co. said yesterday that it swung to a profit in the second quarter as increased Pentagon spending continued to offset the poor commercial airline market.
The Chicago aerospace firm reported profit of $607 million (75 cents a share) in the quarter, compared with a loss of $192 million (24 cents) in the second quarter of 2003. The year-earlier figure reflected a $1.1 billion charge related to Boeing's struggling commercial satellite and launch businesses. The latest quarter included a boost from a tax refund and the sale of a part of its financing business.
Revenue rose 3 percent, to $13.1 billion, compared with $12.7 billion.
Boeing's stock gained 79 cents a share to close at $49.01.
"Boeing delivered strong results in the second quarter as we continued to execute well in our businesses and invest for growth," Harry C. Stonecipher, president and chief executive, said in a written statement.
The tax refund prompted the company to boost its expected earnings this year to between $2.25 and $2.45 a share from a range of $2.05 and $2.25 a share. Next year's profit is expected to be between $2.35 and $2.60 a share -- higher than Boeing's previous estimate.
Citing encouraging signs in the global economy and in air traffic, Boeing increased the number of planes it expects to deliver next year to 315 to 320, up from a previous estimate of 300. The company still expects to deliver 285 planes this year.
The second-quarter "results were moderately positive," Byron K. Callan, a research analyst with Merrill Lynch, said in a research note.
The commercial aircraft unit reported a 3 percent drop in revenue, to $5.7 billion from $5.8 billion, while the unit's earnings from operations grew 22 percent, to $382 million from $313 million. Boeing delivered 75 aircraft during the quarter, one more than the same period last year.
Boeing officials said they expect a controversial contract to lease and sell refueling tankers to the Air Force to be signed next year. The $23.5 billion deal has been on hold since December, when Boeing admitted it illegally hired an Air Force procurement official who helped negotiate the deal.
Boeing's defense business, now its largest source of revenue, continued to drive growth, reporting a 9 percent increase in revenue, to $7.2 billion from $6.6 billion. Operating earnings for the unit totaled $696 million, compared with a loss of $429 million.
Boeing's space unit, part of its defense business, reported a 13 percent drop in revenue, to $672 million from $770 million, and an operating loss of $50 million. "We're still focused on repairing that business," Stonecipher said in a conference call with analysts. He added that he expects the unit to break even next year.