Boeing forecasts 2016 earnings below estimates; shares tumble

(Reuters) Boeing Co said on Wednesday it would deliver fewer planes in 2016 and forecast earnings below expectations, sending shares tumbling as much as 10 percent to a more than two-year intraday low.

The world’s biggest planemaker also reported weaker fourth-quarter profit, mainly due to a charge announced last week for slowing production of the 747-8 jumbo.

Boeing expects to deliver 740 to 745 planes in 2016, its centenary year, down from a record 762 in 2015. It will build fewer 737s as it shifts that factory to the upgraded 737 MAX. It also is cutting 747-8 output in response to weak demand.

The 737 production cut surprised analysts who had expected Boeing to maintain rates during the transition rather than potentially cede delivery market share to rival Airbus SA.

Boeing said it plans to increase production of 737s to 57 a month in 2019, a new target roughly in line with the 60-per-month target Airbus announced in October for its competing A320 jetliner.

Boeing also said it would cut 777 production to seven a month in 2017, reflecting slower sales and the need to transition to the 777X model, with new engines, new composite wings and technologies from the 787 model, due out by 2020.

Analysts said the 737 production slowdown would reduce 2016 earnings, but they wanted more details from Boeing. Technical problems halted Boeing’s conference call before analysts could ask questions, and it was scheduled to resume Wednesday afternoon.

Boeing forecast 2016 core earnings, excluding some pension and other costs, between $8.15 and $8.35 per share, below the average analyst estimate of $9.43, according to Thomson Reuters I/B/E/S.

Its forecast for about $10 billion in operating cash flow in 2016 raised concern among analysts.

Boeing’s net income fell to $1.03 billion, or $1.51 per share, in the fourth quarter, from $1.47 billion, or $2.02 per share, a year earlier.

Core earnings declined to $1.60 per share from $2.31, reflecting a charge for slowing production of the 747-8 jumbo jet. Wall Street looked for core earnings of $1.26 per share, according to Thomson Reuters I/B/E/S.

Both figures reflected the aftertax charge of $569 million, or 84 cents a share, for cutting 747-8 output to six planes a year from 12, starting in September 2016.

Fourth-quarter revenue fell about 4 percent to $23.57 billion. Analysts expected $23.53 billion, according to Thomson Reuters I/B/E/S.

Shares were down almost 7.4 percent at $118.52 on the New York Stock Exchange and fell as low as $115.02. Its 52-week high is $158.83.