Boeing profits rise but stock drops on 787 production costs


NEW YORK — Boeing Wednesday raised its full-year profit forecast on strong third-quarter earnings, but investors sold off shares due to concerns about high production costs of its signature 787 Dreamliner aircraft. Earnings for the third quarter came in at US$1.36 billion, up 17.6 percent from the year-ago period, as the aerospace giant raised its annual profit forecast for the third quarter in a row on increased commercial aircraft deliveries. But Boeing shares plummeted 4.5 percent to US$121.45, making it the day’s biggest laggard in the 30-stock Dow Jones Industrial Average. Analysts cited worries over Boeing’s meager cashflow due to the 787’s elevated cost profile. Production costs on the high-tech aircraft have dropped somewhat, but not as quickly as expected. ��Where’s the cash?�� asked a note from RBC Capital Markets. Questions about the 787’s cost outlook dominated an analyst conference call as Boeing chief executive Jim McNerney confirmed that the aircraft will not become ��cash positive�� until 2015.

McNerney said production costs for the vehicles ��continue to progress well��, however.

Boeing raised its full-year profit forecast to US$8.10-US$8.30 per share ��core�� earnings from the prior range of US$7.90-US$8.10 following the strong third-quarter results. Key drivers included a jump to 186 commercial aircraft deliveries, up from 170 in the 2013 period. Boeing booked 501 net orders during the quarter, with Irish carrier Ryanair signing a deal for 100 Boeing 737 jets.