Textron's quarterly earnings disappoint Wall Street

Textron, the parent company of Fort Worth-based Bell Helicopter, disappointed Wall Street with lower-than-expected profits Wednesday despite a strong performance from Bell in both commercial and military aircraft sales.

Slower-than-anticipated sales of Cessna business jets, already weak due to the sluggish economy, and a slump by the company’s defense systems business weighed on results.

Textron shares fell $1.51 to $24.95 a share, a 5.7 percent drop. The stock has had strong gains in the second half of the year after being as low as $16.86.

Textron reported net profit of $151 million, or 51 cents a share in the quarter, compared to $142 million and 47 cents, a year ago. The Bell division, which is primarily the helicopter company, saw revenues increase 20 percent to $1.08 billion for the quarter and operating profit increased 15 percent to $165 million.

Income from continuing operations at Textron was 48 cents a share, below the 51-cent average of 15 estimates compiled by Bloomberg. That ended a five-quarter run of beating quarterly estimates.

“It is concerning that margins are down despite flattish sales, given investor optimism regarding the ‘turn-around’ at the business,” Julian Mitchell, an analyst in New York, wrote in a note to investors.

Bell delivered 11 V-22 Osprey aircraft and five H-1 helicopters to the Defense Department in the quarter, compared with nine V-22s and seven helicopters a year ago.

“Bell continues to execute well in both its military and commercial businesses,” Textron Chief Executive Scott Donnelly said in a conference call with investment analysts.

“We saw a significant increase in our commercial business, with 46 units delivered in the second quarter, compared to 26 a year ago.”

Commercial helicopter sales, unlike business jets, are gaining some momentum. The Bell 429 twin-engine and 407 GX single-engine models are gaining sales and market share.

Bell builds major components for its commercial and military aircraft in its Fort Worth-area plants, and this week broke ground for a new headquarters facility as part of a $230 million expansion of its east-side campus. The military aircraft are assembled in Amarillo and the commercial aircraft in Mirabel, Canada.

This report includes material from Bloomberg News.