|
Boeing profits fall 15 pct.
|
 |
July 21, 1997: 12:52 p.m. ET
But sales surge 48 percent; EU readies Wednesday vote on merger
|
NEW YORK (CNNfn) - As the European Union stood poised to reject a Boeing Co. merger, possibly triggering a trade war, the aviation giant on Monday reported declining profits on higher sales.
Net earnings for the second quarter fell 15 percent to $399 million from $468 million in the year-ago period. However, sales at the Seattle-based company surged 48 percent to $9.3 billion over the same period a year earlier.
On a per share basis, earning fell 19 percent to 55 cents from 68 cents in the year-ago period. That fell short of a mean estimate of 60 cents among analysts polled by I/B/E/S.
Investors reacted sharply to the news, pushing Boeing's stock (BA) down 1-3/16 to 54-7/8 in morning trading on the New York Stock Exchange.
The company blamed the drop in earnings in part on a $176 million charge, or 25 cents a share, to settle defense and space contract issues.
The increased sales were aided by higher commercial aircraft deliveries and the acquisition of space and defense units from Rockwell International Corp. in December 1996.
Sales were offset by higher research and development costs, a higher income-tax rate, and higher joint-development costs with the newly-acquired Rockwell units.
Research and development costs were $735 million in the first half of 1997, an increase of $138 million over the same period a year earlier.
The earnings announcement comes as the EU prepares a vote Wednesday on Boeing's $14 billion merger with McDonnell Douglas. Many members of the EU have sharply criticized the deal, saying it would harm fair competition in Europe.
The two sides have deadlocked over a compromise. The EU is concerned about exclusive supply contracts Boeing has signed with three large U.S. airlines and the perceived risk that defense subsidies could spill over to the commercial aircraft sector.
The EU could fine Boeing up to 10 percent of its turnover for ignoring an EU ruling. The EU could also fine any European nation for doing business with the company.
Boeing could challenge the ruling in the European Court of Justice.
-- Martine Costello
|
|
|
|
|
 |
|
