DHNET.BE | Créer un Blog | Avertir le modérateur


Slow recovery to drag aircraft parts makers' outlook

BANGALORE/ATLANTA (Reuters) – A rebound in air travel is expected to help U.S. aircraft parts suppliers fire up their afterburners when they report quarterly results, but a slowing pace of recovery in the aerospace market can be a drag on their outlook.

Aerospace giant Boeing Co (BA.N), along with parts suppliers Goodrich Corp (GR.N), B/E Aerospace Inc (BEAV.O) and Precision Castparts Corp (PCP.N), will post quarterly earnings this week.

Other key names, such as Spirit AeroSystems Holdings (SPR.N), Rockwell Collins Inc (COL.N) and Triumph Group (TGI.N), will report in the following weeks.

Analysts expect parts suppliers to benefit from gains in aftermarket demand as well as better-than-expected backlog at original equipment manufacturers.

Gleacher & Co analyst Peter Arment expects an "earnings beat and sales raise" for Goodrich, which derives 45 percent of its sales from the aftermarket.

"The strong portfolio of Goodrich, which supplies fuel systems and landing gear to planemakers and provides aircraft maintenance, is in the pole seat for a rebound led by gains in aftermarket demand," Arment said.

B/E Aerospace, the world's biggest supplier of aircraft interior products, is expected to report higher quarterly results mostly in line with expectations, helped by growth in its $1 billion non-discretionary consumables business.

However, a slowing aerospace market recovery would make comparables tough for parts suppliers going ahead.

The International Air Transport Association, the global airline industry body, said on October 14 that the number of passengers traveling in business and first class slowed in August from July, suggesting that the post-recession air travel rebound could be easing.

"I think we will see further evidence of the recovery," said Alex Hamilton, managing director at EarlyBird Capital. "The question still remains the trajectory."

Most component suppliers are expected to be conservative in outlook as they still wait for a better visibility in terms of order growth.

"We expect conservative guidance for those discussing 2011, given the pace of the aftermarket recovery, and as OEM volumes are not set to ramp for another two quarters," Gleacher & Co's Arment said.

RBC Capital Markets analyst Robert Stallard expects Goodrich to guide 2011 "modestly" below analysts' expectations due to headwinds from pension-related costs and the lagging aftermarket recovery.

"B/E Aerospace may also guide below consensus," Stallard said. "But stripping out higher debt cost, we expect the outlook to be characteristically optimistic."

On the other hand, Triumph Group is expected to benefit from its March 2010 acquisition of Vought Aircraft Industries. The deal helped it to become the fourth largest aerostructure firm, gaining significant traction at Boeing.

Triumph has forecast full-year 2011 earnings "in excess" of $6.00 a share. "There remains upside to FY11 guidance given the turn in aftermarket and OEM volumes," Arment said.


Planemaker Boeing, the largest customer for the aircraft parts suppliers, is expected to report a third-quarter profit of $1.05 a share against a year-ago loss of $2.22 a share on higher revenue, according to Thomson Reuters I/B/E/S.

According to StarMine SmartEstimates, which give more weight to timelier forecasts by the historically most accurate analysts, Boeing will post a third-quarter profit of $1.13 a share, 7.7 percent more than the mean estimate.

Boeing, which reports on October 20, said earlier this month that it delivered 124 planes in the third quarter, up from 113 a year ago [ID:nN07112813]

Based on the higher deliveries, at least two analysts have said Boeing could top Wall Street expectations for the period and boost its full-year outlook.

"The likelihood of a beat and raise Q3 makes us positive (on Boeing) on a short-term basis, though 787 risk is still a concern in both the short and medium term," J.P. Morgan analyst Joseph Nadol said in an October 11 note to clients.

(Reporting by Bijoy Koyitty in Bangalore and Karen Jacobs in Atlanta; Editing by Unnikrishnan Nair)

Les commentaires sont fermés.