Textron Aviation Q1 2017: Low Turboprop Sales Due to Currency Exchange Rates

Textron chairman, president and CEO Scott Donnelly announced in the first-quarter investor conference call for 2017 that Textron Aviation revenues were down with lower King Air sales being a contributing factor.

“Overall, revenues and profit were down in the quarter consistent with our expectations,” said Textron Chairman and CEO Scott C. Donnelly. “We are continuing to execute our restructuring plan while maintaining our focus on new product investment and the integration of acquired businesses, all of which will have a positive impact on our long term growth outlook.”

Compared to 1st quarter last year, revenues were down $121 million. Textron Aviation delivered 35 Citation jets (up from 34 last year). 12 King Air turboprops were delivered, compared to 26 of last year’s first quarter, along with 2 Beechcraft T-6 trainers, (down from 9 last year). Segment profit was $36 million compared to $73 million a year ago – mostly due to lower volume and mix. The total backlog was $1.0 billion at the end of first quarter.

Donnelly explained that poor King Air sales performance was mostly attributed to the international market. With a strong dollar, buyers have chosen to defer purchasing until currency exchange rates are more favorable. Over 50% of purchases are international, but only three planes were purchased from overseas buyers in Q1.

“I’d rather turn down a sale than sell at too low a margin,” Donnelly says. “We need to hold the line on pricing to keep the business healthy.”

US buyers are currently “positive, but a little guarded,” while waiting for a stronger economy and completion of tax reform.

Despite the current low numbers, Donnelly believes sales will rebound later in the year to reach the 2016 level of 106 deliveries by years end.

 

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