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Gold/Mining/Energy : Bombardier, maker of planes and trains and other things -- Ignore unavailable to you. Want to Upgrade?

To: Hassan Lakhani who wrote (656)	10/1/1999 6:46:00 AM
From: Glenn McDougall	Read Replies (1) \| Respond to of 1177

Bombardier predicts profit will triple Transportation giant expects revenue will also double in five years as production increases OLIVER BERTIN Aerospace Reporter Friday, October 1, 1999 Bombardier Inc. expects to double revenue and triple profit over the next five years, as its aircraft, trains and snowmobiles wheel out the factory doors in ever-increasing numbers. "The past 12 months have been good to Bombardier," said Robert Brown, president and chief executive officer of the Montreal-based transportation giant. "Now, we are doing even better." In an all-day meeting with financial analysts and investors yesterday, Mr. Brown predicted profit will grow by up to 35 per cent in the current fiscal year and up to 40 per cent for each of the fiscal years ending Jan. 31, 2001 and 2002. "Our revenue goal is $23-billion by 2004," he said, adding that he was confident Bombardier would reach those "conservative targets." Such a performance would continue the steady growth at Bombardier that gave it record profit and revenue in 1998-99. It did even better in the first half this year. Bombardier made a profit of $313.6-million for the six months ended July 31, up from $234.8-million in the same period the year before. Revenue rose to $6.03-billion from $4.8-billion. Those estimates were good enough for investors, who sent Bombardier's B stock up by $2.45 on the Toronto Stock Exchange yesterday to close at $24.35, up 11 per cent. Volume was 10.7 million shares, more than twice the previous high this year. Bombardier was the most active stock on the Toronto Stock Exchange yesterday. Most of the Bombardier analysts were attending the meeting in Montreal yesterday and were unavailable for comment. But the markets were apparently impressed by the company's projections for the performance of its various divisions. Already the third-largest airplane manufacturer in the world, Bombardier expects to deliver 300 airplanes in 1999. This would be 30 per cent more than in 1998, with another 20-per-cent increase coming in 2000. Mr. Brown said the recreational products division is back on track after a restructuring earlier this year, while the transportation division has become the largest manufacturer of passenger railway cars in the world. As for the finance division, Bombardier Capital expects to double revenue over the next five years with a pretax margin of 15 per cent by fiscal 2001-02. The markets were also intrigued by Bombardier's announcement that it would decide by year-end whether to go ahead with the 90-seat version of its highly successful Regional Jet airliner. "A 90-seat version would be a very attractive option for us," Mr. Brown said. "The economics are very compelling." He noted that Bombardier could develop the 90-seat aircraft for about $200-million -- small change in the aerospace business -- and have it flying within two years, well ahead of the competition. "We can get to market very quickly," he said, adding that Bombardier's long-held strategy is to develop new aircraft for unexploited niche markets, and pick up customers before the competition arrives. Bombardier can get to market first and at a far lower cost than the competition because it already has 50- and 70-seat versions of the Regional Jet. They are more than capable of being stretched into the 90-seat version with relatively few changes. Other manufacturers would have to develop a 90-seat aircraft from scratch, a process that would take at least four years and cost more than twice as much to do. Mr. Brown estimated the 90-seater would sell for about $28-million (U.S.), compared with $24-million for the 70-seater and $21-million for the original 50-seater Regional Jet that is so popular with Air Canada and many other airlines around the world. Mr. Brown believes there are good sales prospects for a 90-seat Regional Jet, because it fits neatly between the Boeing 717 and the proposed Airbus 318, both of which are larger, heavier and more expensive. Bombardier is losing interest in the proposed 100-seat version of the Regional Jet. Now, Mr. Brown said, the company is considering an all-new, bigger, heavier, wider aircraft that would be developed from scratch. But that project would cost far more and take much longer to develop than the 90-seater Regional Jet.