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Bombardier burning through cash: analysts

Tags: Bombardier
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Bombardier Inc. (BBD.B-T) beat expectations on Wednesday when it reported a 53-percent jump in second-quarter profit. But analysts were unimpressed by the result, as the plane and train maker said it was burning through cash, as orders for its regional jet were slowing.

"Orders from the regional and commercial look a little weak and that's likely going to result in lower cash flow in operations and negative free cash flow for the year," Ben Elias, analyst at Sterne Agee & Leach, tells BNN. "The backlogs also look a little weaker."

Walter Spracklin, analyst at RBC Capital Markets, also voiced concern in a note to clients about the company's free cash flow.

"The key here is that while quarterly variances are expected, the significant drain is cause for concern, in our view," he said.

"Management indicated that they expect customer advances to remain low for the remainder of CY11 and now expects full year FCF [free cash flow] usage, as compared to prior guidance of positive FCF of $700-800 million."

Net profit for the second quarter came in at $211 million US, or 12 cents a share, compared with $138 million, or 7 cents a share, a year ago.

Revenue for the company increased 17 percent to $4.74 billion.

Analysts were expecting profit of 10 cents per share on revenue of $4.49 billion, according to Thomson Reuters I/B/E/S.

Bombardier's order backlog also increased to $56.9 billion as of July 31, up from the $55.1 billion on April 30.

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