The Boeing Company (BA) reported its earnings before the opening bell on July 22, 2015. Revenue for 2Q15 increased from $22.045 billion last year to $24.543 billion this year. Both revenues and core earnings per share beat analysts’ estimates. However, profits declined by 33% from $1.65 billion in 2Q14 to $1.1 billion in 2Q15.
The company’s 2Q15 performance was impacted by an unexpected $536 million post-tax charge on Boeing’s KC-46 tanker program for the US Air Force. Boeing had to pool in additional investments for the integrated fuel system, which is also the last major system to undergo component qualification testing.
Market reactions to earnings
Boeing saw a strong buildup during the past two weeks, moving from $138.73 on June 29 to $146.72 on July 20. However, the concerns arsound the tanker charges led to some weakness on the previous day when the stock fell by about 1% to close at $145. The Industrial Select Sector SPDR ETF (XLI) fell by 1.73% in the same period. Among Boeing’s competitors, United Technologies (UTX) fell 10.53%, Lockheed Martin (LMT) rose 7.5%, and General Dynamics (GD) fell 0.36%.
The market welcomed Boeing’s better-than-expected earnings report by opening about 2.6% higher at $148.90 for the earnings day, backed by substantial volume. However, as the details flowed in, the gains couldn’t be maintained as investors were let down by the lower earnings and the company’s lowered guidance.
Headquartered in Chicago, Illinois, Boeing (BA) is the leading aerospace company and has a global reach. It designs, manufactures, and sells:
- commercial and military aircraft
- electronic defense systems
- launch systems
- advanced information and communication systems
- performance-based logistics and training
Boeing is among the largest global aircraft manufacturers and is also the second-largest defense contractor in the world. The Boeing Company is organized into five segments:
- Boeing Commercial Airplanes (or BCA)
- Boeing Defense, Space, and Security (or BDS)
- Operations and Technology
- Boeing Capital
- Boeing Shared Services Group
In the next article, we will look at Boeing’s 2Q15 performance in detail.