Boeing Co.’s profits tumbled 15 percent in the second quarter, the company said Monday, adding that its drive to raise jet production is causing parts shortages and higher overtime costs.
The results for the quarter ended June 30, the last before Boeing’s planned merger with McDonnell Douglas, showed profits of $399 million or 55 cents a share, compared with $468 million or 68 cents a share in 1996. Last year’s second-quarter was inflated by a $176 million gain for the settlement of some defense and space contracts.
Analysts had expected Boeing to do about a nickel a share better. The company’s stock was down $1.69 and closed at $54.38 per share Monday on the New York Stock Exchange.
Sales were $9.3 billion, up 48 percent from $6.3 billion in second-quarter 1996, primarily due to more commercial jet deliveries and Boeing’s acquisition late last year of Rockwell International’s defense and space business.
In the most recent quarter, Boeing delivered 92 jetliners, compared with 62 a year earlier.
Boeing is increasing its commercial jet production to meet airline demand and currently produces 30 jets a month, up from 22 a month at the start of the year. A year from now, it plans to be producing a record 43 each month.
Phil Condit, Boeing chairman and chief executive said troubles keeping up with the rapid expansion is hurting productivity. Boeing is working to improve efficiency and reduce the amount of time it takes to build an airplane, he said.
“They’re ramping up quickly and adding a lot of people,” said Bill Whitlow, manager of the Safeco Northwest mutual fund. While that’s going to hurt efficiency in the near future, “there’s nothing here that really bothers me in terms of the longer-term outlook,” he said.
Boeing Commercial Airplane Group spokeswoman Donna Mikov said some aircraft have been delivered late to airlines, but only by a few days. “It’s tough and we’ve said that all along, that it’s going to be tough for the rest of the year,” she said.
For the first six months of the year, Boeing had profits of $712 million, or 99 cents a share, on sales of $16.6 billion, compared with net earnings of $587 million, or 85 cents a share, on sales of $10.6 billion a year earlier. Boeing and McDonnell Douglas shareholders vote Friday on whether to merge into the world’s largest aerospace company.
Last week, McDonnell Douglas reported quarterly profits of $195 million, or 93 cents a share, on revenues of $3.56 billion, compared with earnings of $188 million, or 87 cents a share, on sales of $3.26 billion a year ago.
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