NEW YORK (AP) — Boeing surprised Wall Street with a 3 percent improvement in second-quarter net income Wednesday on strong sales of commercial airplanes. The company raised its earnings forecast for the year.
The results announced before the markets opened eased investors’ fears of an imminent slowdown in the company’s defense unit, which produces Chinook helicopters and F-18s among many other aircraft models. They also highlighted strong growth in the company’s commercial airplane unit which has been rapidly increasing the pace of production for some planes to meet demand.
Boeing, based in Chicago, reported net income of $967 million, or $1.27 per share, for the April-June period compared with $941 million, or $1.25 per share, a year earlier.
Revenue jumped 21 percent to $20 billion from $16.54 billion a year ago.
Analysts polled by FactSet expected earnings of $1.13 per share on revenue of $19.28 billion.
Defense revenue rose 7 percent, while revenue in the commercial airplane division jumped 34 percent. The divisions are roughly the same size, but some observers fear they will go in opposite directions.
Boeing’s defense unit is vulnerable to potentially severe military spending cuts in January. The cuts would be automatic unless Congress agrees to an alternative for cutting the deficit. The military would face $492 billion in cuts over a decade, with domestic spending reduced by another $492 billion over 10 years.
But it’s clear the unit is still holding strong. The second-quarter revenue growth is about the same as Boeing saw in the first three months of the year. Defense contractor Lockheed Martin had reported second-quarter results that surprised Wall Street earlier.
Boeing’s commercial airplane unit, meanwhile, is speeding production and deliveries of its new 787. That will move planes that have been mostly finished, but undelivered, out of inventory and turn them into cash. Boeing is also booking firm orders for its new 737 Max, a redesigned version of its classic 737.
Higher costs somewhat overshadowed strong results in both segments. Total expenses rose 30 percent in the spring quarter.
For all of 2012, Boeing Co. now expects to earn $4.40 to $4.60 per share, up from between $4.15 and $4.35. Still, that new forecast is mostly under what Wall Street is banking on. Analysts predict $4.57 per share, on average.
Boeing shares rose 95 cents to $72.98 in morning trading.
Copyright 2012 The Associated Press.