Bombardier eases cash burn as train, jet-parts sales climb

Bloomberg

Bombardier Inc. burned through less cash than expected in its last quarter as the majority owner of the C Series jetliner, buoyed by rising sales of aircraft parts and rail equipment.
Revenue rose in the second quarter and Canada’s largest aerospace company reported a surprise profit, according to a statement. Bombardier also reaffirmed its sales, earnings and cash-flow targets for 2018 and 2020.
The results boost Chief Executive Officer Alain Bellemare’s drive to transform the company as he starts the second half of a five-year turnaround plan designed to increase profit and reduce debt. Having cut jobs, bolstered liquidity and teamed up with Airbus SE on the C Series, the CEO is now working to push the planemaker’s next big revenue generator, the Global 7500, into service later this year.
“With our heavy investment cycle largely behind us, our focus is now on ramping-up production and improving operational efficiency to accelerate growth,” Bellemare said.
Bombardier’s capital expenses exceeded its operating cash flow by about $370 million in the three months ending on June 30. The negative free cash flow was less than the
$546 million average of analysts’ estimates compiled by Bloomberg. Including the one-time proceeds from a Toronto real estate sale, Bombardier generated free cash flow of $232 million for the period.
“Based on the early read we believe these results should be well received by the market today,” Walter Spracklin, an analyst with RBC Capital Markets in Toronto, said in a note to clients. “Overall looks to be a solid quarter.”
Sales growth was strongest in the rail unit, with an 11 percent increase to $2.26 billion. Earnings before interest, taxes and special items in trains — Bombardier’s biggest business, even before the handover of the C Series — soared 16-fold to $163 million. Bombardier delivered eight units of the former C Series jet in the quarter before ceding control of the programme to Airbus on July 1.