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WASHINGTON — Textron Inc., which makes Cessna planes, Bell helicopters and turf maintenance equipment, said Tuesday its first-quarter profit fell 63 percent as the recession drove down demand for its corporate jets. It also slashed its 2009 profit outlook and said it expects more job cuts.
The quarterly results reflect lower demand for Textron's large manufactured goods and smaller profits at its finance arm. Tough economic times have forced the Providence, R.I.-based industrial conglomerate to cut its global work force by 15 percent in recent months.
Textron also said it plans to sell $300 million worth of convertible senior notes and 19 million shares of its common stock.
The company will use the proceeds to repay debt and boost its cash. It will also hedge against any dilution of its common stock related to the convertible note sale. The diversified manufacturer has been aggressively looking to improve its liquidity, ending the quarter with $1.7 billion in cash.
"Despite the tough economic environment, our liquidity plan is substantially ahead of schedule," said Textron Chairman and CEO Lewis Campbell, in a statement.
Textron's first-quarter net income totaled $86 million, or 35 cents per share, down from $231 million, or 91 cents per share, in the same period last year. Textron reported a day earlier than Wall Street had expected.
In after-hours trading, shares dropped 89 cents, or 8 percent, to $10.31, after closing at $11.20. The company's stock had rallied in recent weeks amid speculation that it could be a potential buyout target.
Before restructuring charges of $32 million, Textron earned a profit of 26 cents per share — beating Wall Street's earnings forecast of a penny per share.
The company now expects full-year restructuring charges of roughly $75 million, up from its previous estimate of $40 million. The higher charges reflect expected job cuts as demand continues to wane, along with closures of facilities.
Textron has already reduced its global work force by 6,200 positions. About 4,600 of those job eliminations come from Cessna. The company is expected to provide further details of potential job cuts during a conference call with Wall Street analysts before the market opens Wednesday.
Quarterly revenue fell 24 percent to $2.53 billion led by lower deliveries of business jets and weaker demand for its industrial products like E-Z-GO golf carts and lawn care machinery. Sales missed Wall Street's prediction of $2.78 billion.
Sales at Cessna, based in Wichita, Kan., fell 38 percent to $769 million. The unit delivered 69 jets in the fourth quarter, down from 95 in 2008.
Bell Helicopters' revenue rose 29 percent to $742 million on higher volumes and pricing for its military and commercial helicopters. However, it's industrial unit fell 37 percent because of lower demand for its products and unfavorable foreign exchange rates.
The company's troubled finance arm — Textron Financial Corp. — also reported revenues declined 43 percent to $122 million on lower market interest rates, lower securitization gains and other lower income.
Citing anticipated lower demand for Cessna jets and higher losses at Textron Financial, the company now anticipates earnings per share of between 45 cents and 75 cents in 2009. That is much lower than its previous estimate of $1 and $1.50.
Textron anticipates revenue of $11 billion, below its previous estimate of $12.5 billion for the year. That's also below Wall Street's forecast of a profit of 97 cents on revenue of $11.80 billion.
