Textron shares ascend despite declining business at Bell Helicopter
Textron, the Rhode Island-based parent of Bell Helicopter, won favor on Wall Street on Tuesday after reporting better-than-expected profits for the third quarter and raising its full-year forecast.
Profit for this year will be $2.40 to $2.50 a share, Textron said, raising the low end of the forecast from $2.30.
The company’s stock (ticker: TXT) rose $1.61 a share, or more than 4 percent, to $40.43 — the most in two months — as investors were reassured that the manufacturer, which also produces Cessna business jets, is weathering turbulence in the aerospace market.
Quarterly income from continuing operations was 63 cents a share, up 10.5 percent from the third quarter of 2014. But revenues declined by 7.3 percent to $3.2 billion.
At Bell, revenues decreased by 36 percent, or $426 million, to $756 million, primarily due to deliveries of fewer V-22 aircraft and a change in the mix of commercial aircraft. Bell’s profit fell by a third to $99 million. Bell delivered four V-22s in the quarter, down from 12 a year ago.
“Revenues were down in the quarter, primarily driven by lower deliveries of V-22s at Bell, but we had solid revenue growth at Textron Aviation, Textron Systems and Industrial, reflecting our investments in new products and sales capabilities,” Textron Chairman and CEO Scott C. Donnelly said in a statement.
Bell has cut hundreds of jobs this year in response to its declining business. Earlier this month, the company had a leadership change when John Garrison, Bell’s CEO since 2009, left to become CEO at Terex Corp. Mitch Snyder, who was executive vice president of military business, will take over as Bell’s president and CEO.
On a conference call with analysts, Donnelly said it’s hard to say whether depressed helicopter sales to the oil and gas industry have bottomed. He added that commercial deliveries are expected to be up overall this year and that flight testing is continuing on two new aircraft — the small 505 Jet Ranger and bigger 525 Relentless.
Textron’s sales of aircraft from single-engine propeller planes to corporate jets have been largely unaffected by a stronger dollar and falling exports squeezing companies such as General Dynamics that build larger private aircraft.
The company’s aviation unit, which is weighted toward smaller aircraft and North American customers, posted a 9.2 percent margin, its best since 2008, Jason Gursky, an aerospace analyst with Citigroup, said in a note. While Bell has been hurt by slumping oil and gas industry demand, its 13.1 percent margin topped estimates and grew from a year earlier, “reflecting strong performance,” he said.
Staff writer Steve Kaskovich contributed to this report, which includes material from Bloomberg News.
This story was originally published October 27, 2015 at 4:01 PM with the headline "Textron shares ascend despite declining business at Bell Helicopter."