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The company says this is mainly as a result of actions taken to resolve challenging rail projects, the timing of milestone payments and new orders in the Transportation division, and the delivery of four Global 7500 aircraft slipping into the first quarter of 2020.
The announcement on January 16 resulted in a sharp decrease in Bombardier’s share price, which dropped by up to 36%.
Bombardier’s four quarter consolidated revenue are expected to be around $US 4.2bn, with Bombardier Transportation accounting for $US 1.8bn. Full year revenue is expected to be $US 15.8bn, including $US 8.3bn for Bombardier Transportation.
Bombardier is forecasting a consolidated adjusted Ebit a loss of $US 130m for the fourth quarter, and $US 400m for 2019. Bombardier Transportation expects a fourth quarter adjusted Ebit loss of around $US 230m, which includes a charge of approximately $US 350m related to certain projects in Britain, such as the Aventra fleet which will operate on the Crossrail line in London, commercial negotiations with Swiss Federal Railways (SBB) following delays and problems with the delivery of the Twindexx EMU fleet, and increased production and manufacturing costs for projects in Germany.
Delays in achieving technical milestones, including software certification for the London Overground class 710 Aventra fleet and production ramp-up, required the company to delay some delivery schedules with customers and absorb additional costs. Bombardier says it has entered into commercial negotiations with customers to reset schedules, resolve late delivery penalties, and address related provisions and costs.
Consolidated free cash flow for the fourth quarter is estimated at approximately $US 1bn, approximately $US 650m lower than anticipated largely due to the timing of cash inflows from milestone payments on large rail projects, and the later-than-anticipated closing of certain orders and call-offs.
While the free cash flow shortfall is largely expected to be recovered in 2020, the recovery will be offset by the cash flow impact of the incremental costs recognised in the fourth quarter adjustments at Bombardier Transportation.
While Bombardier Transportation’s fourth quarter financial performance was lower than expected, it says it is continuing to make significant progress completing legacy projects and to take the right actions to position the business for long-term success.
Liquidity remains strong, with year-end cash on hand of approximately $US 2.6bn.
“Consistent with Bombardier’s five-year turnaround plan, and following a comprehensive review of strategic alternatives, Bombardier is actively pursuing options to strengthen its balance sheet and enhance shareholder value,” the company says.
“Since launching our turnaround plan, we have addressed our underperforming aerospace assets, completed our heavy investment cycle, and put the company on a solid path toward organic growth and margin expansion while prudently managing our liquidity and heavy debt load,” says Bombardier president and CEO, Mr Alain Bellemare. “The final step in our turnaround is to de-lever and solve our capital structure. We are actively pursuing alternatives that would allow us to accelerate our debt paydown. The objective is to position the business for long-term success with greater operating and financial flexibility.”
Bombardier says it will provide additional information when it reports its fourth quarter and full year 2019 financial results on February 13.
The post Delayed rail projects contribute to Bombardier profit downturn appeared first on International Railway Journal.
This article first appeared on www.railjournal.com
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