May 11, 2016: Boeing strives to be a global industrial champion, not just against its peer group, says Greg Smith, the chief financial officer of The Boeing Co. Boeing has a continuing commitment to returning cash to shareholders, repurchasing 150 million shares, he said.
Note: Boeing is holding its annual investors’ day (really a half-day) today, with presentations by: Dennis Muilenburg , Chairman, President and ChiefExecutive Officer, Greg Smith , Chief Financial Officer and Executive Vice President of Corporate Development & Strategy, Ray Conner , Vice Chairman and Commercial Airplanes President and Chief Executive Officer and Leanne Caret , Executive Vice President and Defense Space & Security President and Chief Executive Officer. We’ll report on the presentations by Muilenburg, Smith and Conner, but not the DSS unit.
Boeing has had 17 production rate increases in recent year, with five more on the way.
Boeing has 12 orders for the 777 Classic this year, out of a target of 40-50, needed to help build the bridge to the 777X.
“We’re not satisfied with our current segment margins,” Smith said. Boeing achieved a 10% margin last year but wants to grow to the mid-teens in the near future. Cutting costs, improving productivity and achieving favorable pricing on its aircraft and other products are necessary to reach this goal.
Smith said Boeing is working to reduce risk in production, transitioning its pension plans to a less risky structure, achieving labor contract stability through 2022 and transition carefully between current and new products are elements of this focus.
“We expect earnings to grow over the next decade. We expect cash flow to grow at even a faster pace,” he said.
Recovering the 787 deferred production costs will be achieved by shifting to the deliveries of -9s and -10s, and improving pricing for the currently remainging 900+ aircraft in the backlog. This will account for about 70% of the deferred production recovery, Smith said. Ramping production rates and supply chain costs will account for about 25% of the recovery. Cost cutting will account for the rest, he said.