Profits at Bombardier | Investors remain thoughtful

Bombardier has recorded its first real annual net profit in five years, but still has work to do to convince investors. The aircraft manufacturer’s ability to generate cash fueled nervousness and caused its stock to nosedive.

Presenting its fourth-quarter results on Thursday, the private jet maker said it expects to generate between US$100 million and US$400 million in cash – an indicator closely followed by analysts – in 2024 given that it expects to deliver between 150 and 155 devices, which represents growth of approximately 10% compared to last year.

Since the latter had set their target at US552 million, investors were cooled by the aircraft manufacturer’s forecast. On the Toronto Stock Exchange, the Class B stock fell 14.7%, or $7.66, to close at $44.45.

“We work in a complex supply chain environment,” explained Bombardier President and CEO Éric Martel in a conference call. Our stocks will increase because we need to stock them. We delivered a lot of aircraft in the fourth quarter. It’s a way for us to make an investment in something that will pay off in the future. Sometimes people need to take the time to understand. »

The stock’s plunge overshadowed the company’s performance last year, where it met or exceeded its targets while returning to profitability. Its revenues increased by 16% to reach US$8 billion while net profit stood at US$445 million, or US$4.24 per share. The 2022 financial year ended with a net loss of US$148 million, or US$1.88 per share.

“Even if we are somewhat disappointed by the forecasts for cash flows for 2024, the profit outlook nevertheless shows continued progress towards the 2025 targets,” said analyst Cameron Doerksen of National Bank Financial. , in the wake of the decline in action on Bay Street.

A milestone

This is the first time since 2018 that Bombardier has posted a net surplus. A surplus was generated in 2021, but this was explained by the sale of the railway division to Alstom. Confident, Mr. Martel says profits will become the norm rather than the exception.

“We have an order book which gives us stability,” he says. Last year, we demonstrated our ability to work in a more uncertain environment in which there were elements beyond our control. We are resilient. »


Bombardier President and CEO, Éric Martel

The optimism of Bombardier’s big boss contrasts with the recent trend in business aviation. According to the firm WingX, the level of activity fell by around 4% last January compared to the same period in 2023. It nevertheless remains higher (16%) than what was observed in 2019, before the pandemic.

This recent slowdown was reflected in Bombardier’s order book. As of December 31, its value was estimated at US$14.2 billion, down from US$14.7 billion at the end of the third quarter. During the months of October, November and December, the ratio of new contracts to deliveries – an indicator of short-term demand – was 0.8, according to Benoit Poirier of Desjardins Securities.

“Bombardier’s forecasts suggest that most of the increase in deliveries from one year to the next will be attributable to the Challenger family, less profitable than the Global range,” underlines the analyst, in a note sent to his clients.

The last year allowed the aircraft manufacturer to reduce its debt by 400 million US dollars. Its debt ratio is now 3.3 times adjusted operating profit. This is a decline of 28% compared to 2022, underlines Bombardier.

Alongside an increase in deliveries, Bombardier expects to generate revenues of between US$8.4 billion and US$8.6 billion in 2024. Its adjusted operating profit is expected to range between US$1.3 billion and US$1.35 billion. US.

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  • 215 million US
    Bombardier’s fourth-quarter net profit, down 11%


    Private jets built by the aircraft manufacturer that are in service around the world



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