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Triple-threat could boost Bombardier: analyst

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Bombardier Inc (BBD.B-T) reported a bigger-than-expected quarterly profit as the world's No. 3 civil aircraft maker got a lift from lower taxes and financing costs even as business jet orders picked up sharply after a two-year slump.

The business jet market fell hard in 2009 as companies cut spending and tighter credit made purchases difficult, but has started getting back on track with the global economic recovery.

Bombardier, whose bigger rivals are Airbus and Boeing (BA-N), got a big lift early in March with a massive order for up to 120 business jets from Warren Buffett's NetJets Inc., a deal that could be worth up to $6.7 billion US.

Revenue at the company's aerospace unit rose about 7 percent to $2.9 billion, also helped by deliveries of more commercial aircraft and higher selling prices.

Firm order backlog at the unit, which received 88 net orders in the quarter, was flat at $16.6 billion.

"Looking forward, backlogs should be strengthening in both (the aerospace and transportation) divisions and we would expect higher earnings in the future," analyst Chris Murray of PI Financial told Reuters.

In February, Bombardier forecast the delivery of 150 business aircraft and 90 commercial aircraft in calendar 2011, an estimate based on an 11-month financial year.

"The thing you really need to focus on ... is the cash flow was remarkably strong (because) the earnings were stronger; there was a very strong reversal in working capital and they managed capital spending reasonably well," Murray said.

Free cash flow jumped three-fold to $1.5 billion in the quarter. Bombardier ended the quarter with $4.2 billion in cash, up from $3.4 billion last year.

This can help fund future development programs including the C-Series and Learjet 85 as well as other aerospace programs, Murray said.

The company launched its C-Series development program for next-generation narrow-body jets in 2008.

The Learjet 85 is built primarily from composites and features advances in aerodynamics, structures and efficiency.

Fourth-quarter earnings before interest and tax (EBIT) margins rose to 6.8 percent of revenues, compared with 5.4 percent, a year ago. The company is targeting an EBIT margin of 10 percent by calendar year 2013.

The global effective income tax rate was 11.2 percent for the fourth quarter, compared with a statutory income tax rate of 30 percent, the company said.

Bombardier reported a net profit of $325 million, or $18 cents a share for the quarter, while analysts on average were expecting 11 cents a share.

Montreal-based Bombardier, which is also the world's biggest passenger train maker, said quarterly revenue at its transportation unit fell 7 percent to $2.5 billion as several countries phased out major projects.

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