Spirit Aero posts a drop in full-year earnings

Washington DC
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Full-year 2009 profits at Spirit AeroSystems fell 28% to $192 million even as ship set deliveries for large commercial aircraft increased compared to the year prior.

The company's full-year results were hit by charges recorded in the second quarter, unfavourable adjustments in the fourth quarter and challenges on some of its development programmes. The value of Spirit Aero's backlog fell 12% year-over-year to $28 billion at the end of 2009 as Airbus and Boeing deliveries exceeded orders.

During the fourth quarter Spirit Aero had a pre-tax, $34 million charge related to changes in contract profitability estimates largely associated with higher than forecasted costs on contract blocks completed in December 2009 and higher than expected costs on the Sikorsky CH-53K programme.

For the full year of 2009 Spirit Aero's operating income fell 25%, but revenues grew 8% to $4 billion.

Fourth quarter financial performance for Spirit Aero was more positive as profits grew 153% year-over-year to $50 million on revenue growth of 67% to $1 billion. Operating income soared 201% to $85 million.

The company attributes the increase in fourth quarter revenues to a schedule recovery from the 2008 machinists strike at Boeing.

"During the year we encountered challenges on new programmes and faced cost pressures on our core programmes as we recovered from the [International Association of Machinists and Aerospace Workers] IAM strike at Boeing early in the year and began transitioning resources between programmes late in the year," says company chief executive officer Jeff Turner. "Looking through the challenges, the core business continues to perform and we made progress on our development programmes."

Spirit Aero is now involved in four programmes currently in flight test development: the Boeing 787, Gulfstream G250, Gulfstream G650 and the Rolls-Royce BR725.

For 2010, Spirit Aero expects revenues of $4 billion to $4.2 billion based on Boeing's delivery guidance of 460 to 465 aircraft, anticipated 787 deliveries, forecasted Airbus deliveries of 480 to 490 aircraft, foreign exchange rates consistent with 2009 levels and forecasts for non-OEM production activity and other customers.