Boeing reported a jump in fourth-quarter earnings on Wednesday thanks to higher commercial plane deliveries and a boost from US tax reform as it projected more strong results in 2018. Shares of the US aerospace giant powered higher after it reported net profit in the fourth quarter of $3.1 billion, up a stunning 92 percent from the year-ago period. Revenues came in at $25.4 billion, up nine percent from the equivalent stretch in 2016, strengthened by higher commercial plane deliveries and increased defense revenues from deliveries of weapons systems.
Boeing has benefited from rising demand for commercial aircraft as airlines score higher profits and boost orders. "Across Boeing our teams delivered a record year of financial and operational performance as they focused on disciplined execution of production and development programs, growing services, and delivering value to customers," Boeing chief executive Dennis Muilenburg said. Earnings were lifted by $1.1 billion following passage of US tax reform, which permitted Boeing to reduce its deferred tax liabilities.
The company's forecast for 2018 included higher revenues, earnings per share and profit margins in its commercial airplane, defense and global services divisions. It projected commercial plane deliveries of 810 to 815 this year, which would exceed the record 763 in 2017.
Boeing has raised production rates of key vehicles as they have become more seasoned in the company's manufacturing system, enabling higher profit margins. The company plans to increase output of the single-aisle 737, its most popular offering, from 47 a month to 52 later this year and to 57 in 2019. Boeing is well positioned "for continued growth into and beyond 2020," Credit Suisse said in a note. "We think the Dow's 2017 darling will continue to attract strong support in 2018 too."
Although analysts consider Boeing's prospects to be generally bright, it faces questions over how it will respond to a surprise setback last week in a trade dispute involving Canada's Bombardier. The US International Trade Commission voted to block the Commerce Department's decision to impose heavy tariffs on Bombardier in response to Boeing's complaint that the Canadian company received unfair subsidies.
Boeing expressed disappointment with the decision, but has not said whether it will appeal through the courts.Another open question concerns Boeing's contracts to Iran Air following an easing of sanctions under former President Barack Obama following the Iran nuclear deal. President Donald Trump has sharply criticized the agreement, but has not yet moved to derail it.
And the status of Boeing's talks with Brazilian aerospace conglomerate Embraer remains unclear. The two companies confirmed they were in talks on a potential combination in December, but the Brazilian government, which holds veto power, opposes a takeover by Boeing.
Boeing shares surged more than five percent in early trading to $355.31, giving a big boost to the Dow, which open sharply higher. Boeing shares have more than doubled over the last year, making it a standout stock in an up market.