BA Boeing Co

By Jon Ostrower 

Boeing Co. on Wednesday said it had been forced to take more charges on two of its jet programs and reported first-quarter profits that fell short of analysts' expectations.

The company has struggled with the development of new military and commercial jets, running up large charges on new programs that have diluted the benefits of a surge in orders and deliveries of passenger planes.

The company said a $162 million pretax charge on its new Air Force refueling tanker was required to keep the program on schedule.

The charge adds to the $1.26 billion in overruns associated with the jet's development. The tanker charge and a $70 million charge on its 747-8 jumbo jet weighed down its commercial margin to 7.2% or a drop of 3.3 points from a year ago.

Despite the earnings decline and miss -- adjusted profit also fell short of Wall Street's expectations -- the company backed its full-year guidance.

Chicago-based Boeing, the world's largest aerospace company, has delivered strong earnings in recent years, driven largely by booming demand for commercial jets, accumulating a $424 billion backlog.

In the latest quarter, the company delivered 176 commercial planes, down 4% from a year earlier. Revenue in Boeing's commercial segment declined 6.4% to $14.4 billion.

Earlier this year, the company issued guidance that fell well short of investor expectations. Boeing said it would deliver 740 to 745 commercial aircraft in 2016, down from the record-high 762 last year, as it produced new jets that won't be delivered until 2017.

The company also said deferred production costs on its 787 Dreamliner rose to $28.65 billion, up $149 million during the quarter. Investors are closely watching Boeing's progress toward reducing these costs and delivering on its expectations of turning a cash profit on each delivery later this year.

The company said higher deliveries of military aircraft helped offset the dip in commercial jet deliveries. Revenue from military aircraft rose by about a third, thanks to higher F-15 and C-17 deliveries. Rival military contractors have similarly reported improved business in the first quarter. On Wednesday, Northrop Grumman Corp. and L-3 Communications Holdings Inc. topped expectations and raised guidance, while Lockheed Martin Corp. did the same on Tuesday.

For the quarter, Boeing reported a profit of $1.22 billion, or $1.83 a share, down from $1.34 billion, or $1.87 a share, a year earlier. Including the charges related to the company's tanker program, among other items, adjusted earnings per share fell to $1.74 from $1.97.

Revenue edged 2.2% higher to $22.63 billion. Analysts had projected $1.82 in adjusted earnings per share on $21.44 billion in sales, according to Thomson Reuters.

For the year, Boeing affirmed its forecast for adjusted earnings of between $8.15 and $8.35 a share. Boeing still predicts 2016 revenue of between $93 billion and $95 billion.

Lisa Beilfuss contributed to this article

Write to Jon Ostrower at jon.ostrower@wsj.com

(END) Dow Jones Newswires

April 27, 2016 11:06 ET (15:06 GMT)

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