Bombardier suffers losses after cutting forecast on new rail-unit woes
CANADA's Bombardier Inc has lost as much as a quarter of its value and bonds plunged after the company cut its 2019 sales forecast amid new struggles at its train-making business
CANADA's Bombardier Inc has lost as much as a quarter of its value and bonds plunged after the company cut its 2019 sales forecast amid new struggles at its train-making business.
A slower production ramp-up on some rail projects dented first-quarter sales and accounted for most of the CAD1 billion (US$743 million) cut to the 2019 revenue outlook, the Montreal-based company said in a statement. The timing of aircraft deliveries also hurt first-quarter results, though the company said it should be able to recover the shortfall during the rest of the year.
'We had a soft first quarter driven by the timing of aircraft deliveries, foreign-exchange headwind and a slower production ramp-up at Transportation,' which makes trains, CEO Alain Bellemare said in the statement, reports Bloomberg.
The weaker forecast adds to the pressure on the rail-equipment division, Bombardier's biggest, which has been plagued by missteps on high-profile projects in New York, Toronto and Europe. Mr Bellemare, who is in the fourth year of a five-year turnaround plan, is counting on the business for about half of Bombardier sales as he pares the commercial-aircraft business to focus on making trains and private jets.
'This company has been in a state of constant restructuring, it's been a consistent over promises under deliver,' said John O'Connell, CEO of Toronto-based investment manager Davis Rea Ltd. The timing of the forecast cut is 'dodgy', considering that Bombardier just did its liability management last month.
The company is to release its full first-quarter earnings report today (May 2).