PROVIDENCE – Textron Inc. (NYSE: TXT) today posted a 53 percent decline in full-year profit, a near reversal of its 52.6 percent increase in fiscal 2007, as restructuring costs and loan or investment losses outweighed a 12.93 percent rise in annual revenue.
For the fiscal year ended Jan. 3, the multi-industry company posted a profit of $486 million – from the preceding year’s $917 million profit (READ MORE) – on annual revenue that rose $1.63 billion to $14.25 billion. Diluted earnings per share fell to $1.95 from the year-ago $3.60.
Results for the year just ended included fourth-quarter costs of $526 million: $64 million in companywide restructuring charges, plus $169 million in goodwill impairment at Textron Financial Corp. (TFC) and $293 million in mark-to-market adjustments on certain receivables at the division, which the parent company last month said it plans to shrink by about two-thirds. (READ MORE) Also in the fourth quarter, Textron recorded a one-time after-tax gain of $111 million from the sale – announced in September (READ MORE) – of the Textron Industrial segment’s Fluid & Power Group, which was acquired by U.K.-based Clyde Blowers Ltd. Excluding those items, Textron would have seen its annual profit dip $16 million, or 0.17 percent, to $901 million.
After fourth-quarter special charges of $526 million, the Textron Financial division posted a full-year profit of $1.48 billion, a 7.27 percent decline from the year-ago $1.59 billion, on annual revenue that shrank 17.37 percent to $875 million. The division’s ills, and declining orders for Cessna business jets, have spurred major ratings agencies to pare the grades they assign to certain Textron long-term debt. Moody’s Investors Service this month pared its rating on about $6.5 billion of Textron long-term debt to Baa2 – two levels above junk – from the previous Baa1. (READ MORE) And rival Standard & Poor’s last month lowered its ratings, also by one notch, citing Textron Financial’s “weaker-than expected” performance.
Meanwhile, in the Manufacturing division, Cessna Aircraft posted a segment profit of $905 million, a 4.62 percent increase from fiscal 2007’s $865 million, on revenue that rose 13 percent to $5.66 billion; Bell Helicopter saw its segment profit rise 93.06 percent to $278 million, on revenue that rose 9.53 percent to $2.83 billion; Textron Systems (formerly the Defense & Intelligence unit at Bell) saw its segment profit rise 46.07 percent to $279 million on revenue that rose 58.62 percent to $2.12 billion; and Textron Industrial (including E-Z-Go, Greenlee, Jacobsen, Kautex and the Fluid & Power Group) posted a segment profit of $67 million, down 61.27 percent from fiscal 2007, despite revenue that rose 3.29 percent to $2.92 billion.
“Economic conditions continued to weaken during the fourth quarter, significantly impacting our Industrial and TFC business,” said Lewis B. Campbell, the parent company’s chairman and CEO. (Taking on the role of president, since Jan. 21, is Scott C. Donnelly, who continues as Textron’s chief operating officer. READ MORE) “However, for the year, we had strong performance at Bell, Cessna and Textron Systems,” Campbell said.
The combined backlog of orders at Cessna, Bell and Textron Systems rose over the year to $23.2 billion on Jan. 3. That represented an increase of $4.4 billion, or 23.40 percent, from the $18.8 billion backlog at the end of fiscal 2007, when the company saw its backlog swell by 45.7 percent.
For the fourth quarter, Textron posted a net loss of $209 million – compared with net profits of $206 million in the 2008 third quarter (READ MORE) and $256 million in the 2007 fourth-quarter – on total revenue that edged up $15 million, or 0.42 percent, to $3.61 billion. Excluding the period’s $526 million in special charges and the $111 million gain from the Fluid & Power sale, the company would have seen fourth-quarter profit decline $13 million, or 5.08 percent, to $243 million. The company’s net loss per diluted share amounted to 87 cents, compared with its third-quarter earnings of 84 cents per share and year ago earnings of $1 per share.
Highlights of the period included the signing in October of a $242.1 million contract to build 17 more Shadow unmanned aircraft for the U.S. military (READ MORE) and the announcement of plans to build a new factory in Mexico (READ MORE). And this month, Textron won a Six Sigma award – in the environmental category of the iSixSigma Live! Summit & Awards – for a compressed-air savings program at its Bell division. (READ MORE)
“Our priorities this year are clear,” Campbell said: “Maximize cash flow and operating performance in our manufacturing businesses; and aggressively convert finance receivables at TFC to cash.
“We’re aligning production to match expected lower commercial demand; reducing non-essential capital spending; freezing salaries; curtailing most discretionary spending, including reductions in non-critical product development; and reducing working capital.” In November, the company’s Cessna segment cut back on the number of Citation business jets it plans to deliver this year, citing the “softening” global economy. (READ MORE) And in October, Bell Helicopter said it would lay off 500 workers, or 4 percent of the segment’s staff, after it lost an Army contract for a new reconnaissance helicopter. (READ MORE)
“We believe that we are taking the right actions and will emerge from this recession leaner and more focused,” Campbell said.
“We fully expect that growth in our strong defense businesses will sustain us over the next several years,” the CEO continued. “After world economies recover, this growth will be augmented by expansion at Cessna as well as the remainder of our commercial businesses.”
Textron Inc. (NYSE: TXT) is a $14.2 billion company employing 42,000 people in 28 countries. Its brands include Bell Helicopter, Cessna Aircraft Co., Jacobsen, Kautex, Lycoming, E-Z-GO and Greenlee, among others. Additional information is available at www.textron.com.
