Textron financials show Cessna, Bell hitting bottom

 - February 17, 2010, 6:38 AM

In its fourth-quarter and year-end report for 2008, Textron– parent company of Cessna Aircraft and Bell Helicopter–forecast the economy would “continue to… result in lower volumes at Cessna.” On January 21 this year, the company announced its fourth-quarter 2009 and end-of-year numbers and it appears the earlier report took an optimistic view of the future.

In its 2008 report, released in January 2009, Cessna reported fourth-quarter revenues and segment profits decreased $64 million and $90 million, respectively, compared with the fourth quarter of 2007. The report released January 28 this year for 2009 revealed that Cessna’s revenues for the fourth quarter dropped a precipitous $642 million compared with the same period in 2008, and segment profits fell by $170 million.

The value of the order backlog as of the end of 2008 was $14.5 billion, up from $1.9 billion at the end of 2007. By the end of 2009, according to the recent report, that backlog had shrunk dramatically, to $4.9 billion. Textron president and CEO Scott Donnelly attributed that decrease in part to $1.7 billion in cancellations, “primarily from a large customer.” Based on a record of past orders, analysts believe that customer was NetJets, which had placed orders at the Paris Air Show in mid-2007 for 96 Citations valued at more than $1 billion. The deal called for deliveries of Citation Encore+s to begin in 2008, Citation XLSs in 2009 and Citation Xs this year.

Cessna delivered a total of 289 aircraft last year, a dramatic drop from the 535 deliveries forecast at the beginning of last year. According to Donnelly, Cessna expects to deliver 30 to 35 aircraft in the first quarter of this year but anticipates the rate will increase over the following three quarters for 225 total deliveries this year.

CJ4 Deliveries To Begin
Good news came in the form of the sale of 14 so-called “white-tail” aircraft through last year’s fourth quarter. Donnelly said he expects Cessna will sell approximately the same number in the early months of this year and that the company expects to liquidate the inventory of unsold airplanes by year-end.

Other good news comes from the Citation CJ4 program, with deliveries to begin in the second quarter “and ramp up significantly throughout the year.” Deliveries of the company’s Citation Mustang light jet also remain strong, with 125 in 2009 and 105 anticipated this year.

Textron subsidiary Bell Helicopter saw revenues for the fourth quarter drop $51 million and that segment’s profit decreased $10 million compared with the fourth quarter of 2008. Bell Helicopter revenues and segment profit increased $98 million and $40 million, respectively, in the fourth quarter of 2008, compared with the fourth quarter 2007.

The Bell backlog at the end of 2008 was valued at $6.2 billion, up from $2.4 billion at the end of 2007. By the end of 2009, the value of the backlog had increased to $6.9 billion, driven primarily by V-22 military orders.

Bell delivered 153 commercial helicopters last year and expects to deliver 150 this year. According to Donnelly, the weak civil helicopter activity is being offset by the increase in military helicopter orders, and Bell anticipates delivery of 28 V-22s this year. The build rate for the V-22 is expected to ramp up to 34 a year next year and continue to build to about 40 per year in 2013 as international interest builds.

While deliveries are down considerably from last year, Donnelly said Cessna is boosting its research and development this year, focusing primarily on light and midsize aircraft, block-point changes and new entries. And while he confirmed “a higher level of interest and more inquiries,” he said Cessna would make no new-product announcements until it believes there is sufficient demand.