Cabin interiors manufacturer BE Aerospace is predicting double-digit revenue growth for several years to come as the company benefits from a fleet renewal effort by the world’s airlines.
This demand for new cabins, particularly for a greater number of “new-buy” widebodies, has prompted the U.S. manufacturer to improve its 2012 guidance some 17 cents since this time last year to $2.82 per diluted share—and a 26% growth on 2011—and issue a 2013 outlook of $3.38 per diluted share, a 20% increase on what is already a record year for BE Aerospace.
This 20% increase in profits is expected on a 10% rise in revenues, reflecting a continued improvement in margins, Chairman and CEO Amin Khoury told analysts during the company’s third-quarter results conference call.
“Widebody is our sweet spot, and it is growing,” Khoury added, noting that these aircraft outfits require “higher-price, higher-margin products.”
New aircraft are starting to dominate BE Aerospace’s backlog, accounting for 61% of the company’s sales, although Khoury acknowledges that this also reflects weakened aftermarket demand that is expected to continue until at least 2014. New-buys also helped boost the manufacturer’s backlog, which increased to $800 million to $3.8 billion at the end of the September quarter; unbooked supplier furnished equipment sales add a further $4.5 billion to this backlog.
That backlog is “well dispersed geographically,” says BE Aerospace, with emerging markets accounting for 34%, Europe 27% and North America 39%. Of the North American segment, eight percentage points are allocated to U.S. airlines.
Commercial aircraft cabin outfits remain the dominant sector for BE Aerospace, accounting for a little more than half of the $766.7 million in third-quarter revenues (itself a 21% increase on the third quarter 2011). But sales growth from the commercial sector, at 15.8%, was overshadowed by the 23.9% year-on-year rise in BE Aerospace’s consumables management division to $295.8 million and the near 33% improvement from business aviation, which posted sales of $85.3 million in the third quarter.
This difference in growth rates also was reflected in operating income improvements, with commercial aircraft earnings increasing 18.9% to $67.3 million, consumables management 24.4% to $59.2 million and business aviation 57% to $12.4 million.