Textron: Cessna’s 1Q Performance ‘Disappointing’
Cessna’s first-quarter revenues of $556 million were up by $123 million from the same period a year ago, but the Textron division still managed to sustain a larger operating loss–$38 million versus $24 million last year. “While there are a number of items in the quarter [that] contributed to the magnitude of the loss,” Textron chairman and CEO Scott Donnelly said yesterday during an investor teleconference, “I would say that our underlying operational performance at Cessna was disappointing.” Contributing to these losses were higher-than-expected costs in ramping up Citation CJ4 production, as well as eroding price margins due to inflation. Donnelly emphasized the need for increasing productivity at Cessna to “restore our profitability, even as we increase investments in new products and service offerings.” During the quarter, Cessna delivered 31 Citations, the same number as in the first quarter of last year. On the bright side, Donnelly reported, “Order and customer inquiry activity was higher than it was a year ago…[and] inquiries are broad-based geographically.” He said Cessna’s first-quarter gross orders improved from last year, as did pre-owned Citation sales. Based on this positive trend, Donnelly expects Cessna to deliver “slightly” more Citations this year than the 179 it shipped last year.