Bombardier shares tank 18% after it cuts profit, revenue forecasts
FILE PHOTO: Logo of Bombardier is seen at an office building in Zurich, Switzerland, February 28, 2019. REUTERS/Arnd Wiegmann/File Photo
(Reuters) – Canada’s Bombardier Inc cut its full-year profit and revenue forecasts on Thursday, as its key railcar-making unit wrestled with delivery delays and manufacturing challenges relating to a few large projects, sending its shares plummeting more than 18 percent in early trading.
The forecast cuts came as the plane-and-train maker nears the end of a 5-year turnaround plan, after heavy investment in plane production drove the company to the brink of bankruptcy in 2015.
Shares tanked 18.5 percent to C$2.39, and the stock was the top loser on the Toronto Stock Exchange.
Montreal-based Bombardier cut its 2019 revenue estimate by $1 billion to $17 billion, while adjusted core earnings are expected to be in the range of $1.50 billion to $1.65 billion, compared with its prior expectation of $1.65 billion to $1.8 billion.
“This is not great news, but this is not like ‘the end of the world’ news,” William Blair analyst Nicholas Heymann said.
Bombardier has been dogged by a handful of rail contracts in its $34 billion backlog that generated a disappointing free cash flow result in 2018 and subsequent selloff of Bombardier stocks and bonds.
Bombardier cut its full-year revenue forecast by $750 million to about $8.75 billion for its transportation business, which makes rail cars, and by $250 million to $1.15 billion for its commercial aircraft business.
The company will report first-quarter earnings on May 2.
Reporting by Arathy S Nair in Bengaluru, Allison Lampert in Montreal and John Miller in Zurich; Editing by Anil D’Silva and Bernadette Baum