DALLAS (AP) — Boeing’s third-quarter profit rose 34 percent on lower taxes, and the company raised its forecast for 2016 earnings, revenue and airplane deliveries.
The results beat Wall Street expectations, and Boeing shares rose in midday trading on Wednesday.
CEO Dennis Muilenburg called the aircraft market “generally positive” with a “moderate” pace of sales orders.
Demand for the single-aisle 737 remains strong, he said, but the company might slow production of the bigger, two-aisle 777 jet until replacement demand picks up again early next decade.
Muilenburg told analysts that Boeing still expects to increase 737 production from the current 42 to 57 planes per month in 2019. But, he said, the company will decide soon whether to reduce 777 output by one or two planes per month in late 2017 or 2018. Boeing currently plans to build seven a month in 2017.
Even if production of so-called widebody planes is trimmed, Boeing should still surpass 900 aircraft deliveries per year by the end of this decade, Muilenburg said.
On Boeing’s military business, the company still expects moderate growth in U.S. defense spending and solid demand overseas.
Boeing said it earned $2.28 billion, up from $1.70 billion a year ago, even though revenue declined 7.5 percent.
The Chicago-based company said that excluding one-time items and a tax-basis adjustment that had not previously been disclosed, it would have earned $2.81 per share. That beat the average forecast of 10 analysts surveyed by Zacks Investment Research, who expected $2.62 per share.
Revenue fell to $23.90 billion in the quarter but also beat the Zacks forecast.
Boeing said it expects full-year earnings from its core businesses to range between $6.80 and $7 per share, an increase of 70 cents to reflect the previously unannounced tax-basis benefit. It forecast revenue will be between $93.5 billion and $95.5 billion, an increase of $500 million from a previous prediction. Analysts had expected $94.01 billion, according to FactSet.
The company delivered 563 non-military planes in the first nine months of 2016, including 188 in the third quarter. While that pace is down slightly from 2015, the company still has a huge backlog of orders — more than 5,600 orders for planes with a combined list price of $409 billion. It added 107 orders in the third quarter.
Boeing expects to deliver 745 to 750 airliners this year, up five from its previous prediction.
On taxes, Boeing swung from a $783 million expense and a 31.5 percent tax rate a year ago to a $76 million tax benefit in the third quarter. The switch was partly due to two one-time tax benefits including the settlement of an audit for 2011 and 2012.
For all of 2016, the company expects an effective tax rate of 14 percent, down from 23 percent last year. Boeing expects to return to a tax rate of 31 to 32 percent next year.
The company is reducing its workforce. It had 154,700 employees on Sept. 30, down 6,700 jobs or more than 4 percent in the past year.
Shares of Boeing Co. gained $5.88, or 4.2 percent, to $144.90 in afternoon trading, putting the stock slightly in positive territory for the year. The shares began the day down 4 percent in 2016.