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Bombardier Inc. (BBD.B-T) said the timing of major train contracts hurt its second-quarter revenue and profit, as it wrapped up big projects in Asia-Pacific and European markets, while new orders remained in start-up phase.
Despite a 12-percent drop in quarterly revenue, which was lower than analysts expected, the world's biggest train maker maintained its forecasts, saying it expects full-year revenue to match last year.
"The good news ... is that Bombardier continues to win both sizable follow-on and new rail contracts," RBC Capital Markets analyst Walter Spracklin said. "Management noted that the rail industry markets remained resilient in spite of the challenges of the global economy."
Bombardier, the world's third-biggest plane maker, said net profit for the period that ended June 30, fell to $182 million US, or 10 cents per share, from $211 million, or 12 cents a share, a year earlier.
Revenue declined to $4.17 billion from $4.7 billion.
Analysts had expected earnings of 10 cents a share and revenue of $4.58 billion, according to Thomson Reuters I/B/E/S.
The company repeated its forecast for deliveries of 180 business jets and 55 commercial aircraft with an overall EBIT margin of about 5 percent. Its revenue forecast implies a 19 percent increase in sales over the second half of the year, said BMO Capital Markets analyst Fadi Chamoun.
Revenue from the company's train unit slumped 30 percent to $1.9 billion in the quarter, as contracts for commuter and regional trains, locomotive, metro, intercity trains and propulsion contracts neared completion.
The order backlog dipped to $31.7 billion from $31.9 billion, as foreign currencies weakened against the Canadian dollar.
The unit's closely watched EBIT margin, or earnings before financing expense, financing income and income taxes, fell to 6.2 percent from 7.2 percent.
Revenue from the aerospace division, which makes business, commercial and amphibious aircraft, rose 10 percent to $2.3 billion as plane deliveries rose to 62 from 56.
The unit, which delivered more business aircraft but fewer regional jets, increased its backlog by 14.5 percent to C$25.2 billion from the end of 2011. The EBIT margin dropped to 4.5 percent from 5 percent.
Private jet-sharing company NetJets said in June it would order up to $7.3 billion in business planes from Bombardier, including firm orders for 100 Challenger jets and options for 175 more.
Free cash flow use in the quarter dropped to $642 million from $1.07 billion a year earlier.
The Montreal-based company said that both its new C-Series and Learjet 85 remain on track to enter service at the end of 2013.
The company is investing $3.3 billion to develop the 110- to 149-seat C-Series, its biggest aircraft yet. Plane systems are currently being tested and the company had said it will run test flights by the end of 2012.
Investors and analysts are scrutinizing the timetable because the aircraft sector has been hurt by chronic development delays.
Bombardier competes with Brazil's Embraer in the smaller regional jet market and will take on Airbus and Boeing with the C-Series.
Work on the company's first two flight test Learjet 85 aircraft is well under way, the company said.
Bombardier said its order backlog was $56.9 billion as of June 30, compared with $53.9 billion at Dec. 31, 2011.