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Gulfstream boosts General Dynamics first quarter earnings

General Dynamics' aerospace division recorded a 16.5% rise in first-quarter revenues, thanks largely to strong performance from Gulfstream.

The unit – which also includes business aviation services provider Jet Aviation – saw revenues climb by $293 million to nearly $2.1 billion in the first three months of 2017, while profits soared by more than one third to $443 million, from $332 million in the same period a year earlier.

Gulfstream delivered 30 business jets during the first quarter, 23 large-cabin and seven midsize – up from the 20 large-cabin and eight midsize types shipped during the same period in 2016.

However, the order backlog at the units slipped by more than $600 million in the first quarter to $12.6bn, and the book-to-bill ratio – or the number of orders against deliveries – stood at 0.7:1.

During an earnings call on 25 April, General Dynamics chief executive Phebe Novakovic played down the backlog erosion. It was "consistent" with previous first quarters from 2012 to 2016, she said, adding: "It was part of the normal cycle after a strong fourth quarter."

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"We are off to a very good start in 2017," she says, pointing to sharp increases in activity levels in Europe, and improved activity in China for the period. "I should also note that the activity has been good in April and has clearly shifted in favour of large-cabin [aircraft]. This is quite encouraging," Novakovic adds.

Since production of the midsize G150 was halted last year, the super-midsize G280 has become Gulfstream’s entry-level product. The rest of its six-strong product line sits in the large-cabin and long-range sectors, book-ended by the flagship 7,500nm (13,890km)-range G650ER and the 6,750nm G550.

Novakovic stresses that demand for the G550 as a corporate, commercial and multi-mission platform remains strong, and the 13-year old programme will “remain open for the foreseeable future”.

General Dynamics also expects strong performance from Jet Aviation in the second quarter. “The completions business is steady, [but] lumpy in terms of order activity,” Novakovic says. “But on the service side, we see nice growth in the future.”

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