Bombardier’s Railway Sale Boosts 1Q Profit

Bombardier Inc (BBD.B) posted a 43% increase in first-quarter adjusted profit on Thursday, primarily driven by a favorable mix of large-cabin aircraft deliveries and cost structure improvements.

Bombardier’s revenue came in at $1.34 billion for the quarter ended March 31, down from $1.52 billion in the prior-year quarter. It included revenues from its aerostructure and commercial aircraft operations which it sold last year. Business aircraft revenue was $1.3 billion in 1Q 2021, up 18% from 1Q 2020.

Meanwhile, the business jet maker reported a net income of nearly $5.1 billion ($2.03 per diluted share) in the first three months of 2021, compared to a net loss of $200 million ($0.11 per share) in the prior-year quarter. Profit was boosted by Bombardier’s sale of its railway activities to French company Alstom S.A.

On an adjusted basis, which excludes the $5.3-billion gain on the sale of the rail business, Bombardier lost $173 million ($0.07 per share), compared with an adjusted net loss of $182 million ($0.08 per share) a year ago.

Bombardier President and CEO Éric Martel said, “In our first quarter as a pure-play business aviation company, Bombardier delivered solid financial performance. This includes growth in business jet revenues, margin expansion, and significantly improved cash performance. We also continue to make strong progress on each of our strategic priorities: maturing the Global 7500 aircraft program, delivering on our productivity initiative, executing our aftermarket growth strategy, and deleveraging our balance sheet – setting the foundation for a more resilient and profitable business.”

Bombardier delivered 26 jets in January, February, and March. The company said it remains on track to deliver between 110 and 120 business jets in 2021. (See Bombardier Inc stock analysis on TipRanks)

Earlier this week, CIBC analyst Kevin Chiang maintained a Sell rating on BBD.B, but raised its price target to C$0.80 from $0.50, for a 10.6% downside potential.

Overall, the consensus on the Street is that BBD.B is a Hold based on 2 Buys, 5 Holds, and 2 Sells. The average analyst price target of C$0.87 implies a 2.2% downside potential to current levels.

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