Cessa, Bell report improved Q4 revenues

 - February 26, 2011, 5:30 AM

Cessna Aircraft and Bell Helicopter emerged from 2010 with relatively healthy fourth-quarter revenues and aircraft delivery increases, according to the earnings report for the period released in late January by parent company Textron.

Cessna revenues were $105 million higher than in the fourth quarter of 2009, and the delivery of 79 business jets topped deliveries in the same period in 2009 by 11 aircraft. Cessnaπs backlog at the end of the fourth quarter was valued at $2.9 billion, down $495 million from the end of the third quarter 2010.

Perhaps more impressive, the number of "white-tail" aircraft dropped considerably, from 65 at the end of September to 10 at the end of December.

At Bell Helicopter, fourth-quarter revenues were $173 million higher than in the last three months of 2009. The commercial helicopter segment accounted for $119 million of that total. Bell, said Textron president and CEO Scott Donnelly, was "more stable" than Cessna in 2010.

In fact, profits at Cessna were down $5 million. According to Textron, profits from higher volumes were more than offset by the negative impact of manufacturing inefficiencies related to low production levels, lower forfeiture income, and higher used-aircraft write-downs.

At Bell the news was better, with a $54 million increase in profits, "primarily due to improved performance and pricing in excess of inflation [and] higher V-22 and H-1 deliveries on the military side."

Slight Improvement Projected for 2011

In Textron's 2011 outlook, the forecast at Cessna was for a 1- to 3-percent profit on revenues of approximately $3 billion. At Bell, the outlook was for a profit of 11.5 to 12.5 percent on approximately $3.6 billion in revenues. In terms of sales growth, Textron expects a 12.3-percent increase at Cessna and 21.6 percent at Bell.

Based primarily on a stable global economic environment, Textron anticipates the number of Citation deliveries to increase slightly from last yearπs 179, and Bell commercial helicopter deliveries to top the 131 delivered last year. On the military side, V-22 deliveries are expected to jump from 26 in 2010 to approximately 34 this year, and H-1s from 18 to 23.

According to Donnelly, production management–"whether to under-build or over-build"–will be a key to success in 2011. In 2010, he said, "It turned out we built the right number of airplanes.

"In 2011, weπre building to forecast, model by model. My tendency is to err slightly toward having too many aircraft [and] if we get a run in late year, all the better. It worked for us in 2010, and weπll try to do the same in 2011."

He also implied that there might be some announcements from Cessna at this year's NBAA Convention in Orlando in October, but he added that announcements of upgrades or new aircraft would be market driven.

"An improving commercial outlook, combined with accelerating investments in new-product development, should support top-line growth across our manufacturing businesses," said Donnelly.