GO
Loading...

UPDATE 1-Spirit AeroSystems posts loss on charges, shares tumble 19 pct

Thursday, 6 Feb 2014 | 1:03 PM ET

* Analyst cites more potential bad news from conference call

* Charges tied mainly to 787 program weigh on results

* Company still working on Oklahoma sale

(Recasts with comment, status of potential sale)

Feb 6 (Reuters) - Spirit AeroSystems Holdings Inc, a major supplier of components to Boeing Co and Airbus , reported a loss for the fourth quarter on charges tied mainly to the Boeing 787 program, sending its shares 19 percent lower.

The Wichita, Kansas, maker of fuselage and wing systems also forecast 2014 earnings below the average analyst estimate.

The surprise loss was a setback as Spirit has a history of past stumbles with cost overruns on airplane programs that have hurt its profitability.

During its earnings conference call, the company tried to reassure analysts that it was taking steps to stem the tide of big earnings charges.

"We're trying to make smart decisions as it relates to going forward in terms of the type of work we get involved in and then our ability to estimate that work and make sure that the jobs we take on align with our core competencies," Chief Executive Larry Lawson, a former Lockheed Martin executive who joined Spirit last year, said.

Still, RBC Capital Markets analyst Steven Cahall said Spirit's comments during the earnings conference call that it had lowered pricing in Boeing contracts did not bode well.

"The 787 program is already zero margin so if SPR can't hit its 787 cost targets in time then there are further charges ahead," Cahall said in a note to clients after the call.

The fourth quarter was hurt by pretax charges of $546 million, or $2.42 a share, tied to expected costs on the 787 Dreamliner. The company also recorded costs of $381 million, or $2.69 a share, tied to deferred tax assets.

Spirit said on Thursday the 787 charge was intended to cancel out certain expected forward losses related to the Boeing program - an agreement to settle claims associated with the production of the Dreamliner.

Spirit reported a net loss of $587 million, or $4.15 per share, for the fourth quarter, compared with a profit of $61 million, or 43 cents per share, a year earlier.

Quarterly revenue rose 5 percent to $1.49 billion.

Costs spiraled for Spirit, spun off from Boeing in 2005, when the company started supplying parts for business jets along with commercial planes.

The company's Oklahoma operations, which handle wing design for Gulfstream jets, have run up more than $1 billion in costs since October 2012. The company on Thursday said it continues to work on divesting those operations with potential buyers.

Spirit said it expects 2014 earnings of $2.50-$2.65 per share.

Analysts on average expected earnings of $2.68 per share, according to Thomson Reuters I/B/E/S.

Spirit shares were down 18.7 percent, or $6.18, at $26.80 on the New York Stock Exchange.

(Reporting by Sagarika Jaisinghani in Bangalore and Karen Jacobs in Atlanta; Editing by Sriraj Kalluvila and Andrew Hay)

  Price   Change %Change
OCX
---
BA
---