Bombardier Inc.
“Bombardier Inc. is a world-leading
manufacturer of innovative transportation solutions from regional aircraft
and business jets to rail transportation equipment. Headquartered
in Montreal, Bombardier Inc. is a global corporation with manufacturing
facilities throughout the Americas, Europe and Asia-Pacific. For
the fiscal year ended January 31, 2006, consolidated revenues totaled US
$14.7 billion. The Corporation stock is traded on the Toronto Stock Exchange”
Today, Bombardier has over
56,000 employees in 13 countries. They do business in 60 countries in all
five continents. Bombardier plans to continue to hold a major presence
in North America and Europe while expanding into China, India, Russia and
Eastern Europe. Bombardier estimates that over 90% of the sales come from
outside of Canada.
Bombardier: Flying high?
- title of an article written
by Thomas Watson (From the April 9, 2007 issue of Canadian Business magazine)
…Before the Montreal-based
manufacturer of railway equipment, subway cars and airplanes reported its
quarterly numbers for the three-month period ended Jan. 31; market watchers
were relatively down on the dual-share company.
The Street — which was forecasting
flat Q4 earnings of 5¢US a share — saw potential for upside, mainly
from improvements in Bombardier's operating profit margins and a possible
green-light decision to launch the C Series, a transnational jet for the
90- to 149-seat market. (When first proposed, the US$2-billion project
was billed as the driver of future growth, but the C Series was put in
a holding pattern last year.)
For investors, of course, being patient with Bombardier isn't easy. Just prior to releasing its Q4 financials, for example, two Japanese airlines reported landing-gear problems with the company's airplanes. In the more serious case, a Q400 turboprop flown by All Nippon Airways was forced to land without nose gear. (Last year, ANA apologized for a string of earlier problems with Bombardier aircraft at its annual shareholder meeting. In total, there have been 77 irregular incidents with Bombardier planes reported in Japan since 2003.)
In its fiscal fourth-quarter, Bombardier's net income jumped 30% to US$112 million, or 6¢US a share, up from US$86 million a year earlier. The company's earnings from continuing operations doubled to 12¢US a share. Revenue climbed 8.7% to US$4.39 billion — thanks to strong performance from Bombardier's transportation unit, which had what Beaudoin called "an exceptional year in order intake."
The recently restructured
division helped drive gains in profitability by landing train contracts
in France, Spain and the Netherlands. During the quarter, total new orders
by Bombardier Transportation were valued at more than US$5 billion. As
of Jan. 31, unit back orders sat at a record US$27.5 billion.
On the aerospace front,
Beaudoin said cost-reduction efforts were starting to show progress. But
results were still mixed. The business-jet side experienced its best year
ever, but that strength was offset by ongoing weakness in regional jet
sales, which are not currently contributing to the bottom line as key U.S.
airlines continue to restructure. Bombardier received 274 orders for business
jets in fiscal 2007. That was 55 more than in the previous year and 75%
of the total aircraft order book.
Beaudoin called fiscal 2007
"another year of improved profitability." But the company's net income
climbed just US$19 million to US$268 million, or 14¢US. Revenue increased
to US$14.8 billion, up from US$14.7 billion a year ago.
What about the future? The company put off making a decision on the C Series until next year, but pointed to new orders for CRJ900 aircraft from Northwest Airlines and Delta as proof that the U.S. market for regional jets is on the mend. It also said business-jet demand is expected to grow further, and may actually require a ramp-up in unit production, especially for the popular Global product line, which has an order backlog of 24 months. And that, along with record orders for Bombardier's transportation division, was enough to generate new interest in the stock.
Since then, the Harper government has announced a $900-million aid package aimed at Canada's defense and aerospace industry. On April 3, Bombardier also announced that it has landed an additional order for 67 high-capacity trains from France's national railway company and a supply contract for locomotives in the United States. The two contracts are worth about $560 million. The news pushed the company's stock over $4.70 on April 4. That gave the company a P/E ratio of 29, more than three times its five-year average.
Bombardier presents itself
as a socially responsible company –‘a good corporate citizen and preferred
employer’. They list three essential elements of social responsibility
– economic, social and environmental. They list providing a “safe, healthy
workplace, and to help preserve a sound natural environment for future
generations by operating in a socially responsible sustainable manner.”
“…the Corporation has set a five year environmental target (2004-2008)
to reduce 3% its annual energy consumption, greenhouse gas emission, water
consumption and quantity of hazardous waste”
Forecasts trimmed for firms
reliant on foreign business
Shirley Won and Angela Barnes , Globe and Mail, October 23, 2007
The soaring loonie is hurting Bombardier because it reports in U.S. dollars, but only has a Canadian-dollar stock listing, says Versant Partners analyst Cameron Doerksen. Operating profit, particularly in the transportation equipment maker's aerospace unit, will be significantly hurt because prices for new planes are set in U.S. dollars, but most of its plants are in Canada with Canadian-dollar labour costs, he said in a report yesterday. The rising Canadian dollar has reduced the probability that Bombardier will surpass its 8-per-cent aerospace EBIT (earnings before interest and taxes) margin target, he wrote. He downgraded its stock to a "hold" after reducing his fiscal 2008 earnings estimate to 22 cents (U.S.) a share from 23 cents, and fiscal 2009 estimate to 30 cents a share from 34 cents.
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