Bombardier has reported its fourth quarter and full year 2018 results, highlighting progress executing its turnaround plan.
Bombardier’s 2018 consolidated revenues reached $16.2 billion, reflecting 3% average year-over-year growth across transportation, business aircraft and aerostructures, excluding currency impact. Bombardier’s consolidated backlog reached $53.1 billion at the end of 2018.
EBIT before special items continued to improve in 2018, increasing 42% year-over-year from $725 million to more than $1.0 billion, the top-end of the company’s guidance. The 6.3% EBIT margin before special items in 2018 represents a strong 330 bps increase since the start of the turnaround plan in 2015, well above the 5-6% range originally targeted. On a reported basis, EBIT increased 235% year-over-year to $1.0 billion, representing a margin of 6.2%.
Bombardier generated $1.0 billion of free cash flow in the fourth quarter of 2018. Full year free cash flow generation equalled $182 million, at the high end of the company’s revised guidance. This amount includes aggregate net proceeds of approximately $750 million from the sale of the Downsview property and the monetization of royalties associated with the previously announced CAE transaction. Cash flows from operating activities amounted to $597 million for the full year, and to $1.3 billion in the fourth quarter. Bombardier ended the year in a solid cash position, with $3.2 billion in cash and cash equivalents.
Bombardier Business Aircraft launched the largest and longest range industry flagship Global 7500 aircraft into service on time in 2018. With a strong backlog and unsurpassed performance in its category, the Global 7500 is expected to be Business Aircraft’s key growth driver for years to come.
The segment achieved 137 aircraft deliveries at 137 aircraft for 2018, including 42 Global, 83 Challenger and 12 Learjet.
Continued progress on the aftermarket strategy drove a 14.3% revenue increase year-over-year. Further expansion of our service network was also announced with the groundbreaking for a new centre in Miami, Florida to service U.S. and Latin American customers.
During the year, Business Aircraft unveiled the new Global 5500 and Global 6500 aircraft featuring an all-new Rolls-Royce engine and a newly optimized wing, increasing the aircraft range and fuel burn performance. With flight testing at advanced stages, these aircraft are expected to enter into service at the end of 2019.
In 2018, Commercial Aircraft significantly reshaped its portfolio, focusing on the CRJ Series program and its aftermarket business, while also participating in the growth of the A220 through its partnership with Airbus.
A definitive agreement was reached with Longview Aircraft Company of Canada Limited for the sale of the Q Series aircraft program assets, including aftermarket operations and assets, for gross proceeds of approximately $300 million, on November 7, 2018. The transaction is expected to close by the second half of 2019. Net proceeds for this transaction are expected at approximately $250 million net of fees, liabilities and normal closing adjustments.
Revenues and aircraft deliveries for 2018 were in line with guidance on the basis of the deconsolidation of CSALP results from Commercial Aircraft since July 1, 2018.
EBIT loss before special items was $157 million reflecting for the most part losses on the C Series program in the first half of the year and the post-closing CSALP equity pickup. EBIT loss of $755 million includes a $616 million pre-tax accounting charge related to the closing of the CSALP transaction.
Commercial Aircraft continues to actively participate in the regional aircraft market with the established scope-compliant CRJ Series aircraft, with a focus on reducing costs and increasing volumes while optimizing the aftermarket. “As the focus is to return the program to profitability, Bombardier also announced in 2018 it is exploring strategic options for the program.”