Gulfstream forecasts fall in 2023 aircraft deliveries
Gulfstream Aerospace will deliver five or six fewer aircraft this year compared with the 145 jets predicted in January 2023, according to Phebe Novakovic, chairman and CEO of Gulfstream’s parent company General Dynamics. The shortfall will trim Aerospace revenue by $200m, but be partially offset by stronger service activity, Novakovic told a second-quarter (Q2) investors’ call yesterday. Margins were predicted to fall from 14.6% to 14.1%, implying operating earnings of $1.4bn.
The manufacturer expects to deliver 27 aircraft in the third quarter, followed by “a rapid increase” in the fourth quarter deliveries. G700 deliveries planned for the third and fourth quarters would now take place in the fourth quarter, due to certification delays. Gulfstream plans to make 19 G700 deliveries in the fourth quarter, said Novakovic. The five to six aircraft shortfall in total deliveries this year does not involve G700s, she added.
Gulfstream delivered 45 aircraft – including 35 large-cabin airplanes and 10 mid-cabin models in the first six months of this year compared with 47 in the first half of last year. Deliveries in the second quarter reached 24 aircraft – two up on the same level last year. The book-to-bill ratio was 1.09x in the first half of this year compared with 1.83x in the same period of last year.
Supply chain challenges are easing but continuing to impact deliveries. “Supply chain issues and past Covid labour issues have impacted operating margins, but there is relief in sight,” said Novakovic. “We expect improvement as we progress.” Novakovic added: “We have reliable, increasingly reliable, schedules. That said, they’re more likely to anticipate more catch-up in the fourth quarter, which will allow us to complete a number of those airplanes, but they’re still impacting the third quarter deliveries.”
In the first quarter of this year, deliveries dropped to 21 aircraft compared with the 25 jets it delivered in Q1 2022.
Meanwhile, Gulfstream’s parent company General Dynamics posted Q2 2023 net earnings of $744m on revenue of $10.2bn. Diluted earnings per share (EPS) were $2.70. The company reported a record backlog of $91.4bn and a book-to-bill ratio of 1.2-to-1.
During the first half of this year, revenue of $20bn was up $1.45bn or 7.8% on the same period of last year. Operating earnings of $1.9bn were up less than 1% and net earnings were down $22m, mainly due to below-the-line items, including a higher provision for income taxes.
“Our businesses demonstrated solid momentum despite continued supply chain headwinds in several units, achieving the highest-ever revenue for a mid-year quarter, record-high backlog and very strong cash flow,” said Novakovic. “We are well positioned to continue to perform for the remainder of the year.”
Gulfstream results – at a glance
- Revenue: $3,845m (up 2% yoy)
- Operating earnings: $465m (down 3.3%)
- Revenue: $1,953 (up 4.6% yoy)
- Operating earnings: $236m (down 0.8%)
General Dynamics Q2
- Revenue of $10.2bn: up 10.5% year-over-year, with growth in all four segments of
- Net earnings $744m: Diluted EPS $2.70
- Record backlog of $91.4bn, 1.2-to-1 book-to-bill.
Source: General Dynamics.