Bombardier Inc. narrowed its net loss for the fourth quarter and boosted revenue as a strong performance in rail allows the company to claim a bigger share of that business from its investment partner.
The Montreal-based manufacturer said Thursday that its stake in rail unit Bombardier Transportation will increase from 70 per cent to 72.5 per cent after its financial performance for 2017 exceeded the incentive targets underlying the investment of partner Caisse de dépôt et placement du Québec. The pension fund manager’s ownership position falls by an equal amount.
The shift came as Bombardier announced better-than-expected results for its latest quarter. The company, which reports in U.S. dollars, tallied a net loss of US$109-million on revenue of US$4.7-billion, improving on the US$259-million loss and US$4.3-billion revenue in the same quarter last year.
Earnings before interest, taxes, depreciation and amortization was US$304-million, a 50 per cent improvement over the year-earlier period.
Stripping out all special costs and gains related to restructuring and other matters, the company had a profit of 2 US cents per share. On that basis, analysts were forecasting the company to break even.
Chief Executive Alain Bellemare has pulled Bombardier back from the brink of bankruptcy in 2015 as the company nearly toppled under the weight of heavy investments to bring two all new aircraft to market and the cancellation of a third. Now he’s trying to rebuild earnings amid lingering softness in the market for luxury jets and heightened prospects for the plane maker’s flagship C Series airliner under the control of European partner Airbus SE.
Bombardier management has delivered on its turnaround plan, surpassing margin guidance on all its business segments for fiscal 2017. The company burned through $786-million in cash for the year, $200-million less than forecasted.
Under a deal struck last year, Airbus will take control of the C Series program, throwing behind it the full weight of its marketing and procurement power and helping set up an assembly line for U.S. orders at its manufacturing site in Mobile, Ala. The partners expect to obtain all approvals this year, Bombardier confirmed again Thursday.
The U.S. International Trade Commission last month rejected a petition by Boeing Co. calling for duties on C Series planes imported into the United States. The quasi-judicial body ruled that Boeing suffered no injury from the C Series. It remains unclear if Boeing will appeal the decision.
Bombardier’s rail business delivered a particularly strong quarter, with revenue of $US0.5-billion, new orders worth US$10.2-billion and an EBIT margin before special items of 8.4 per cent. The rail backlog at the end of 2017 stood at US$34.4-billion.