Profits nosedive as sales flag at Boeing

BOEING, the world's largest commercial aircraft manufacturer, yesterday reported disappointing results for the year just ended and added to the gloom by predicting declining sales for at least another year.

Industry watchers had been expecting signs of an earlier recovery in the aerospace business, thanks largely to growth in demand from Asia.

But Boeing said its worldwide sales would probably fall again this year to about dollars 20bn ( pounds 13bn) from dollars 25.4bn in 1993, and not recover until the company begins deliveries of its new 777 model late next year.

Boeing delivered 330 commercial jets last year, compared with 441 in 1992, when it posted sales of just over dollars 30bn. Production levels were lowered on most smaller aircraft models last year, and Boeing now also plans to turn out fewer 747s, slashing production from five a month to three this quarter and then to two in early 1995.

Boeing produced profits of dollars 1.24bn, or dollars 3.66 a share, in 1993, down sharply from the dollars 1.5bn or dollars 4.57 a share it made in 1992. The decline was particularly dramatic in the fourth quarter, with earnings falling to dollars 340m, or 89 cents a share, from dollars 357m or dollars 1.05 a share in the final three months of 1992.

Boeing blamed the poor results on high expenses for the 777 in addition to declining sales in the rest of its product line. Despite lower revenue from its military and space businesses, profits at these operations actually improved to an extent during the fourth quarter.

The Seattle-based manufacturer remains optimistic about the future, saying that despite weak sales it expects to preserve its profit margins because of new production efficiencies.

Sales of its recently redesigned 737 model were particularly encouraging and should account for as much as 40 per cent of the company's deliveries through to the year 2010.

On Friday, Boeing scaled back the number of redundancies it had planned for this year to 7,000 from 10,000. It employs about 116,000 people worldwide.

The company also said that it expects to maintain its dominant share of the world market - about 66 per cent at the last count - as global demand improves.

Boeing shares fell dollars 3 4 to dollars 441 2 on the results announcement, but most analysts support the company's optimism for the long term.

The company should be the biggest beneficiary of any recovery in the air travel market, Gary Reich, an analyst at Prudential Securities, said.