(FROM THE WALL STREET JOURNAL 1/28/16) 
   By Jon Ostrower 

Boeing Co. provided financial guidance for 2016 that fell well short of market expectations and said it plans to deliver fewer commercial jets this year than last, sending its stock down by the most in more than 14 years and triggering a selloff in aerospace shares.

The Chicago-based company on Wednesday said it would hand over 740 to 745 commercial aircraft in 2016, down from the record-high 762 last year. Analysts generally had expected deliveries this year to roughly match the number for 2015.

Chief Executive Dennis Muilenburg, said Boeing is raising and lowering production rates of its most profitable products to ensure that it is in sync with demand for its jets.

The world's largest aerospace company has delivered strong earnings in recent years, driven largely by booming demand for commercial jets. Underlining strong past performance, it posted fourth-quarter profit on Wednesday that easily topped analysts' views, although revenue in the period fell 3.7% to $23.6 billion, with sales in its commercial airplanes division slipping 4% as deliveries fell 7%.

Its 2016 outlook, though, was well below analysts' forecasts. Boeing said it expects to post adjusted earnings of between $8.15 and $8.35 a share during the coming year. Analysts polled by Thomson Reuters on average had predicted $9.43 a share in earnings. Boeing said 2016 revenue should be between $93 billion and $95 billion, compared with analysts' expectations of $97.2 billion.

The guidance caught investors by surprise, sending shares down 8.9%, their biggest single-day percentage drop since 2001.

The forecast rippled across the aerospace industry, pushing down shares in suppliers including Rockwell Collins Inc. and Spirit AeroSystems Holdings Inc., as well as rival Airbus Group SE.

"Boeing's subpar guidance comes at a point when aerospace sentiment is already fragile, and we can see why there is nervousness that this could spill over to Airbus as well," wrote Robert Stallard of RBC Capital Markets.

Other big aerospace companies also served up bearish news. United Technologies Corp. said sales in its Pratt & Whitney segment, which makes jet engines, fell 4.6% in the latest quarter, while its aerospace-systems sales declined 3.8%. Textron Inc., which makes Cessna and Beechcraft airplanes, also issued disappointing guidance and its stock fell 13.4%.

Boeing attributed the expected drop in deliveries to the fact that it increasingly will be producing new aircraft models that it won't start delivering until 2017.

For the quarter ended Dec. 31, Boeing reported a profit of $1.03 billion, or $1.51 a share, down from $1.47 billion, or $2.02 a share, a year earlier. Boeing booked a $569 million charge in the latest quarter related to the 747-8 production cut.

Analysts had forecast $1.28 a share in adjusted earnings on $23.53 billion in revenue.

 

(END) Dow Jones Newswires

January 28, 2016 02:48 ET (07:48 GMT)

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