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Bell Helicopter sales boost Textron’s earnings

April 19, 2012, Fort Worth, Tx. - Strong sales growth at Bell Helicopter helped parent Textron Inc. quadruple its first-quarter profit, topping Wall Street estimates, the company said today.


April 19, 2012
By The Star-Telegram

Bell’s deliveries of commercial helicopters doubled, spurring revenue growth of 33 percent, while Cessna sales climbed 20 percent amid increased shipments of Citation jets, according to a company statement. Adjusted earnings of 41 cents a share topped the 35-cent average in a Bloomberg survey.

"New model announcements from Cessna and Bell are generating purchase interest," Stephen Levenson, an analyst at Stifel Nicolaus in New York, said in a note to investors on Tuesday.

Chief Executive Officer Scott Donnelly in January predicted "double-digit growth" this year at both Cessna, which is developing new business jets such as the M2 and the Citation Ten, and Fort Worth-based Bell. Textron last month agreed to sell 15 Bell 429 helicopters to the Turkish National Police.

Donnelly, who took over in 2008, is paying down debt while winding down the company’s finance unit, which struggled during the recession. Textron reiterated a projection today that 2012 earnings will be $1.80 to $2 a share, on sales of about $12.5 billion. But Textron shares were down $1.38 at $26.27 in morning trading.

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"The focus on daily execution and raising the new product launch cadence is encouraging," said James Kawai, an analyst at SunTrust Robinson Humphrey, in an April 16 note to clients. Textron’s "ill-timed foray" into financial services and other areas cut earnings by as much as $1 per share in the past decade, he wrote.

Net income in the first quarter rose to $118 million, or 40 cents a share, from $29 million, or 9 cents, a year earlier, the Providence, Rhode Island-based company said. Revenue rose 15 percent to $2.9 billion.

"The demand environment for our commercial aircraft and industrial products continued to improve," Donnelly said. "We secured a number of key program wins and made important strategic moves that should help provide growth in the long term."

Cessna signed a preliminary agreement with Aviation Industry Corp. of China, known as AVIC, and the city of Chengdu in March to open a mid-size business jet factory. The two companies also plan to explore venture opportunities that may include forming an aircraft service network.

Textron has been "keeping an eye" on assets of Hawker Beechcraft, the aircraft maker that has sought concessions from lenders to keep operating amid weaker demand from business jets, Donnelly said on an earnings call.

"There are certainly some assets there that would be very interesting," he said. Hawker Beechcraft is owned by Goldman Sachs Group Inc. and Onex Corp., which bought it from Raytheon Co. in 2007.

Cessna’s loss narrowed to $6 million, an improvement of $32 million that the company attributed primarily to higher deliveries, on sales of $669 million. Bell profit climbed 59 percent to $145 million on revenue of $994 million.

Textron builds the V-22 Osprey plane with Boeing Co. and makes other military equipment, including drones and armored vehicles. The company, founded as a textile producer in 1923, also builds E-Z-GO golf carts, Greenlee tools and Kautex plastic fuel systems.


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