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Boeing Company, Facts on Boieng, Boeing Details

Boeing Company, Facts on Boieng, Boeing Details

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  • 1. Agenda  Company Overview  Management Discussion and Analysis  SWOT Analysis  Industry Overview  Porters Five Force Model  Competitors  Valuation  Recommendation
  • 2. Company Overview  Boeing is the world’s largest aerospace company and leading manufacturer of commercial airplanes and defense, space and security systems  It supports airlines and U.S. & allied government customers in more than 90 countries  Headquartered out of Chicago Boeing employs more than 160,000 people across the United States and in 70 countries  Products include commercial and military aircraft, satellites, weapons, electronic and defense systems, launch systems, advanced information and communication
  • 3. Boeing - Divisions Market Segment ( 2010) Commercial Aircrafts Revenue % 50% Defense, Space & Security(BDS) Boeing Military Aircraft (BMA) 22.14% Network and Space Systems (N&SS) 14.7% Global Services and Support (G&SS) 12.83% Boeing Capital Corporation (BCC) 0.99%
  • 4. Commercial Aircraft-Products  Manufactures family of jetliners – Cargo and passenger  Narrow body model-737  Wide body model-767 and 777  Under Development wide body models-747-8 and 787  Offers aviation services support, aircraft modifications, spares, training and technical advice
  • 5. Boeing – Commercial Aircrafts  Delivered 462 airplanes in 2010  Revenue grew by 11% for the year 2010  Boeing 787 has 847 orders from 57 customers in 37 countries  More efficient production lines Year Commercial Airplane Deliveries 2006 398 2007 441 2008 375 2009 481 2010 462
  • 6. BDS - Products  Boeing Military Aircraft  Engaged in R&D production and modification of manned and unmanned military weapons  Mobility – AH-64 Apache, F/A-18 E/F Super Hornet  Network and Space Systems Segment  Assists customers in transforming their operations through network integrations – International Space System, Satellite System  Global Services and Support Segment  Operates, maintains, trains, upgrades and provides logistic support functions for military platform and operations – KC-767 International Tank  82 % of revenues of BDS department have come from defense
  • 7. Geographic Sales 59% 11% 5% 12% 6% 3% 1% 1% 1%
  • 8. Key Financials  2010 Net Income of $3.3 billion vs. $1.3 billion in 2009  Market Capitalization: $58.6bn  P/E: 17.53  Current Share Price: $79.39  Operating Margin: 7.31%  Net Profit Margin: 5.14%  Dividends Yield: 2.10 %
  • 9. 2010 Financial (US dollars in millions except per share data) Recent Financials 2010 2009 2008 2007 2006 Revenues 64,306 68,281 60,909 66,387 61,530 Net Earnings 3,307 1,312 2,672 4,074 2,215 EPS 4.46 1.87 3.65 5.26 2.84 Operating Margin 7.7% 3.1% 6.5% 8.8% 4.9% Contractua l Backlog 303,955 296,500 323,860 296,964 216,563 Total Backlog 320,826 315,558 351,960 327,137 250,211
  • 10. Stock Movement Source :http://finance.yahoo.com/q?s=BA&ql=0
  • 11. SWOT Analysis Strengths • Growth through acquisitions • Strong focus on research and development • Realignment for growth and expansion to new markets Opportunities • Boeing's global outlook for aircraft demand • Surge in the US defense spending Weakness • Highly leveraged • Declining profits and margins • Sluggish performance of business divisions • Dependence on United States Department of Defense as they account for 82% of BDS revenue in 2010. Threats • Increasing prices of titanium and aluminum • Increasing fuel prices • Intense competition • Heavy dependency on US government contracts • Government regulations • Environmental regulations
  • 12. Management Discussion & Analysis  Revenues in 2010 decreased by 6 % compared to 2009   No deliveries on 747 program because of transition from 747-400 to 747-8   Lower 777 deliveries as production rate changed from 7 to 5 per month BDS revenues decreased by $1,718 m due to lower revenues in Network and Space Systems Segment Operating earnings in 2010 increased by $ 2,875 m compared to 2009   Commercial Airplanes earnings increased by $ 3,589 m primarily due to $ 2,693 m costs related to first three 787 flight test aircraft included in R & D in 2009 Long term outlook for the industry remains positive due to fundamental drivers of air travel growth such as:  Economy growth  Trade  Liberalization of air traffic rights between countries
  • 13. Management Discussion & Analysis  To increased the manufacturing of existing commercial airplanes  The company expects the R&D costs to go down in the future
  • 14. R&D 2010($ mn) Total 2838 82.74% 74.96% 589 582 486 8.95% 12.84% 417 397 298 6.10% 7.87% 130 122 149 3.15% Global Services & Support 5383 10.12% Network & Space Systems 2975 14.29% BMA 2008 ($ mn) 72.19% Commercial Airplanes 2009 ($ mn) 1.88% 3.94% 4121 6506 3786
  • 15. Industry Overview  Industry – Aerospace and Defense  Revenues accrued by manufacturers from civil and military aerospace and defense procurements  Major products and services:  Aircraft  Aircraft engines and engine parts  Other aircraft parts and auxiliary equipment  In 2014, the market value is expected to be $1,190.5 billion, an increase of 29.3% since 2009  Defense is the largest segment accounting for 71.8 % of the sector’s total value  $ 3.6 trillion market for 30,900 new airplanes over the next 20 years
  • 16. Industry Overview  Global aerospace and defense industry segmentation: Category Americas 22.0 % Asia – Pacific     59.1 % Europe  External Drivers: % Share 19.0 % Total 100 % Federal Funding for Defense Demand from international airlines Industry systems and technology Demand from domestic airlines
  • 17. Porters Five Force Analysis  Supplier Power (Moderate)  Suppliers are small. However, the high quality inputs provided by suppliers dilute the bargaining power of players  The quality and availability of these inputs is highly important to the quality of the end products in the aerospace and defense industry, increasing the power of the suppliers  Too many suppliers  Buyer Power (Moderate)  Large size of competitors due to merger activity  Players are limited as Airbus and Boeing have a virtual duopoly  Buyers typically government organizations which flex their financial muscles to dilute the bargaining power of players
  • 18. Porters Five Force Analysis  Threat of New Entrants (Low)  High capital outlay and expertise  The arms industry has become highly concentrated, nationally and internationally  Threat of Substitutes (Low)  No real threat of substitutes in defense and aircrafts, however air freight section might be affected with increase in concerns of carbon emissions as companies are seeking eco-friendly reputation  Degree of Rivalry (Strong)  Due to duopoly, Airbus and Boeing are the sole rivals and they are quite evenly matched  Competition is intense in terms of winning defense contracts and companies use innovation and new technology to differentiate their service
  • 19. Historic Growth Year $ Billion % Growth 2005 658.8 2006 737.7 12 % 2007 830.9 12.6 % 2008 917.3 10.4 % 2009 920.6 0.4 % CAGR – 2005 - 2009 8.7 % CAGR – 2009 – 2014 5.3 %
  • 20. Key Players Companies Market Share Boeing 7.4 % EADS 6.5 % Lockheed Martin Corporation 4.9 % BAE Systems Plc 3.8 % Other 77.4 %
  • 21. Competitor Analysis (Fiscal year 12/31/2010) Comparables Revenue (USD billions) Boeing Lockheed Martin BAE Systems Plc 64 46.10 35.258 3.38 2.93 1.758 Operating Margin (%) 7.06 % 8.50 % 7.4 % Profit Margin (%) 5.27 % 6.34 % 7.0 % Debt/Capital(%) 81.3 % 57.5 % 36 % ROE (%) 135.15 % 68.40 % 20.3 % ROA (%) 5.06 % 6.71 % 4.0 % 17.57 % 9.77 % 270.54 % Net Income (USD millions) PE (%)