Crowning a blockbuster year with a tax windfall of more than $1 billion, Boeing announced Wednesday that it made $8.2 billion profit last year and raised its financial forecast for the year ahead.
After a record 763 commercial airplane deliveries in 2017, management reaffirmed plans to ramp up production of the 737 and forecast jet deliveries this year will jump to between 810 and 815 aircraft.
Chief Executive Dennis Muilenburg expressed confidence in the future, citing the increased productivity in Boeing's factories and the growing worldwide demand for airplanes that he said has reduced the cyclicality of the jet business.
"We are as optimistic about our future and the future of our industry as we have ever been," he said in a teleconference with analysts and the news media.
Boeing shares dipped slightly earlier this week after the company Friday lost a trade case against Canadian jet maker Bombardier. But the earnings results put the share price back on its previous upward trajectory.
In midday trading, the stock rose more than 5 percent to a new high above $355.
Productive factories
Total revenue in 2017 was $93.4 billion, 1 percent lower than the previous year because Boeing's deliveries included a higher percentage of smaller, single-aisle planes.
Still, profit for the year was up 67 percent over the previous year, to $13.43 per share, boosted by both productivity gains and the tax benefit.
Stripping out certain pension items to better reflect core-operating performance, the company said core earnings for the year were $9.0 billion, or $12.04 per share.
Muilenburg said the company will continue to push profit margins higher by "reducing every element of our cost structure" both internally and in the supply chain.
Management raised its forecast for the year, saying revenue will jump as high as $98 billion and earnings per share should come in between $15.90 and $16.10.
Boeing in 2017 also generated tremendous cash flow, which has become a key measure that investors watch.
Operating cash flow was $13.3 billion last year and is projected to rise to about $15 billion this year.
Factories humming
Continued productivity gains in Boeing's factories, which are pumping out more airplanes with fewer employees, are priming the gusher of cash.
The ramp-up of the 737 in Renton has been executed even as the new 737 MAX model has been introduced. Boeing delivered 74 MAXs last year and expects that model to constitute 40 to 45 percent of total 737 deliveries this year.
Meanwhile, in Everett and North Charleston, S.C., productivity on the 787 Dreamliner assembly lines cut the total of deferred costs that must be recouped on that program by $590 million last quarter.
In the final quarter of the year, the last of the early 787s that were extensively reworked at huge expense was delivered as a VIP jet to a private customer.
In South Carolina, the new 787-10 model has been introduced with minimal disruption.
Boeing has $25.4 billion in deferred 787 costs to recover.
Still chasing Embraer
Muilenburg reiterated on the conference call his comment in a recent Seattle Times interview that employment levels are expected to flatten in the year ahead, after five years of sharp reductions that cut Boeing jobs in Washington state by more than 21,000.
There was no news on the proposed "middle of the market" airplane informally referred to as the 797. Boeing is studying the business case and won't rush into a decision, he said.
He did, however, say that the tax benefit from recent federal legislation should "further solidify the business case" for going ahead with that new jet.
Muilenburg said Boeing plans to use the tax benefit to invest in innovation, including a transformation of the production system that would introduce more automation in building the next new plane.
He also offered little comment on the loss of the trade case against Bombardier, which Boeing had accused of harming its competitiveness by selling the subsidized CSeries jet at a low price to Delta Air Lines.
Muilenburg said Boeing will wait until the U.S. International Trade Commission releases its detailed reasoning in the case before deciding on the next steps.
The CSeries, which Airbus has committed to take over, seems positioned for sales success.
Meanwhile, Muilenburg said, Boeing is actively pursuing its attempt to acquire Embraer of Brazil _ Bombardier's main rival as a builder of regional jets.
He said Boeing has long had an interest in Embraer, citing complementary aircraft lineups that "could make us more competitive globally."
Nevertheless, Muilenburg said that if the proposed acquisition fails, "our strategy is not dependent on it."
Boeing's fourth-quarter profit nearly doubled from a year ago, to $3.13 billion.
The company said core earnings for the quarter were $4.80 per share.
That was significantly higher than Wall Street expectations. Analysts surveyed by Zacks Investment Research had projected $2.91 per share without the tax benefit, or $4.65 with the tax gain.
