Bombardier pulls in Q2 profit of US$246M; revenue up 22 per cent to $4.93B

MONTREAL - Bombardier Inc. shares fell nearly seven per cent Thursday as the company (TSX:BBD.B) warned that orders for its business jets will slow in the coming months after contributing significantly to a profit turnaround in the second quarter.

On the Toronto Stock Exchange, shares of the Montreal-based aircraft and rail equipment manufacturer lost 58 cents at C$7.82 in midday trading, a decrease of 6.9 per cent from the previous close.

The business jet market was largely responsible for a turnaround in Bombardier's second-quarter results. Net income surged to US$246 million, up from a year-earlier loss of $71 million, as revenue increased 22 per cent to $4.93 billion.

Guy Hachey, president of Bombardier Aerospace, told analysts in a conference call that "we expect things to slow down somewhat" but the market for business jets is still strong.

"We're benefiting from a lot of demand and activity in emerging markets, that's where most of our orders are coming from right now," Hachey said.

Commercial aircraft, mostly sold to airlines, are expected to recover to normal levels over the rest of the year after experiencing declining orders, Hachey said.

The Montreal-based company, reporting in U.S. currency, said its net income was 14 cents per share, up from a loss of five cents per share in last year's quarter ended July 31.

The company's total backlog stood at $57.2 billion, up from $53.6 billion at the start of the year.

Bombardier CEO Pierre Beaudoin said analysts recognize, despite Thursday's share price drop, that the international plane and train maker has accomplished a successful turnaround over the last few years.

"Today we have a company with a strong market position and growth momentum," he told analysts and reporters.

Beaudoin said Bombardier's aerospace and rail divisions have both delivered solid results during the quarter.

Revenue at Bombardier Aerospace was up 14 per cent from a year earlier at $2.52 billion, while the Berlin-headquartered Bombardier Transportation rail-equipment division grew its revenue by 32 per cent to $2.42 billion.

"At Bombardier Aerospace, Business Aircraft recorded a high level of new orders and deliveries, showing the continued popularity of its wide array of products," Beaudoin said.

At Bombardier Transportation, "our extensive range of products and geographic diversification, already reflected in our backlog, bode well for future revenues," he added.

"And we will continue to leverage our strengths and focus on execution and costs to maximize business opportunities."