Despite the economic uncertainty, Bombardier on Thursday announced a US$300 million increase in its order backlog, which stood at US$15 billion in the third quarter.
Although the economic horizon seems to be darkening, the big boss of the business jet manufacturer said that he maintained “with confidence” the long-term objectives of the company. “We believe that we are well equipped to deal with any economic conditions that may be in front of us,” commented Éric Martel, President and CEO of Bombardier.
The company’s US$15 billion backlog provides protection against downturns, Martel said. The ratio of new orders to deliveries is 1.3, which means that the company receives more orders than it delivers aircraft.
“Obviously, we make scenarios in case we have fewer orders than last year, say 25% or 50% less than last year. It is true that our order book would shrink. »
On the other hand, he pointed out that the order book represents approximately two years of the company’s activities. “Let’s assume that we would have 0.75 aircraft sold for each aircraft that we deliver, that would mean that we would lose perhaps three months of order book. It’s far from catastrophic. »
He adds that Bombardier’s customers have strong backs and that it would be “surprising” and “very unlikely” for orders to be cancelled.
The Montreal company is also in a good position to increase the production rate “by 15% to 20%” next year, says Mr. Martel. On the supply chain, he said the company already had “pretty much” all the parts it needed in its factories for the fourth quarter.
“We have been very proactive in managing supply chain challenges, which allows us to look to next year with confidence. »
The trend seems to remain favorable to the industry, believes Benoit Poirier, of Desjardins Capital Markets. “Most of the indicators for measuring trust are above the pre-pandemic average. »
After sales service
Bombardier also highlighted the growth of its aftermarket services business. Revenue from this segment increased 20% to US$372 million out of a total of US$1.5 billion in revenue for the entire company.
Mr. Martel was also in Miami, where Bombardier has just inaugurated a new service center, when the results were presented.
The leader discussed the potential that the resale market represents for Bombardier. He pointed out that around 400 used devices are resold by their owners every year. The company wants to participate in this market by “refreshing” used appliances. “It creates a huge opportunity. »
The results
Bombardier recorded a net profit of US$27 million, compared to a loss of US$376 million for the same period last year.
Prior to the earnings release, analysts had expected an adjusted net loss of 48 cents and revenue of $1.6 billion, according to data firm Refinitiv.
The company took advantage of the favorable environment to reduce debt by US$100 million during the quarter. It has repaid US$873 million year-to-date.
Bombardier delivered good results for the indicators most followed by investors, believes Tim James of TD Securities. “We believe investors’ sentiment is primarily driven by cash flow, orders and long-term debt repayment strategy, all of which were good metrics. »
The analyst believes the company will be able to surpass its financial targets for 2022.
Bombardier shares gained $2.58, or 6.59%, to $41.75 on the Toronto Stock Exchange around noon.