Spirit AeroSystems reported a record $5.4 billion in revenue in 2012, reflecting higher demand and increased production rates on core programs – but net income for the year decreased dramatically.
The company also reported increases in revenue and net income in the last three months of the year, reversing a third-quarter loss.
Spirit makes fuselage and wing components for all Boeing planes, comprising the biggest bulk of its business. It also builds parts for Airbus commercial airplanes and other manufacturers.
The company is continuing its search for a replacement for Spirit CEO and president Jeff Turner, who announced in November his plans to retire this year once a successor is named.
“It’s a rigorous process, as you would expect,” Turner told analysts on a conference call. “We’re looking at both internal and external candidates thoroughly.”
The company has reviewed a number of good candidates, he said.
“We are moving through the process,” Turner said.
For the full year of 2012, Spirit revenue rose 11 percent to $5.4 billion from $4.9 billion in 2011.
Net income for the year totaled $35 million, down 82 percent from $192 million in 2011.
In the fourth quarter of 2012, revenue totaled $1.43 billion, up 17 percent from $1.22 billion for the same time a year ago.
Net income for the quarter totaled $61 million, up from $60 million.
“Spirit’s strong core business performance in 2012 continues to deliver the results we expect,” Turner said in a statement. Higher demand and increased production led to record levels of revenue, “even while we recovered from an EF3 tornado at our Wichita, Ks. facility.”
The company took a direct hit from the tornado in April.
Spirit officials did not mention any potential impact from the grounding of Boeing 787 Dreamliners, which occurred after incidents involving the aircraft’s lithium ion batteries.
Spirit’s performance in its development programs in 2012 underscores the complexity of the business, Turner said.
The company transitioned multiple programs to full-rate production after more than seven years of concurrent development. And it delivered initial production units on the Airbus A350 XWB, he said.
The goal in 2013 is to improve costs and performance across the business and manage the “risk profile” of the company’s development programs, Turner said.
During the third quarter last year, Spirit posted a $211 million operating loss, the result of higher-than-expected costs of producing the 787 wing and on new business jet programs, including the wings for the new Gulfstream G650 and G280 and the nacelle package for the G650.
In the fourth quarter, Spirit again recorded forward loss charges on the G280 program of $20 million before taxes. Spirit took another charge on the program to keep financial risks from escalating, Turner said.
Issues arose while Spirit was in the process of moving some production to different suppliers.
In the process of doing that, a problem arose after Spirit moved some major parts of the G280 wing to a different supplier who had some yield issues that drove schedule problems at Spirit, Turner said.
To solve the problem, Spirit moved some of the work to an alternate supplier, and it also built some of the parts in-house, he said.
On the Boeing 787, Boeing has begun production of the 787-9, a derivative of the 787-8.
The derivative is a major change, so extra production time has been put into the production schedule.
On the Airbus A350 program, Spirit has now delivered six units to Airbus from its plant in St. Nazaire, France.
There are challenges associated with the program.
“Certainly the issues on the A350 are not unique,” Turner told analysts.
There have been late-breaking changes in work that was to be done by Spirit but now will be done inside the Airbus facility. Those are typical of a new airplane program.
“We’re working very closely with Airbus,” Turner said. “Airbus is a very dynamic company,” and it continues to drive hard on schedule.
Spirit’s backlog at the end of the year increased by more than 4 percent to $35 billion as orders exceeded deliveries, the company said.
The company projects 2013 revenue will remain unchanged from last year at $5.8 billion to $6.0 billion.
That’s based on Boeing’s expected delivery guidance of 635 to 645 aircraft in 2013, expected Boeing 787 ship set deliveries, expected Airbus deliveries of about 600 aircraft and internal Spirit forecasts of other customer production activities, expected non-production revenue, and foreign exchange rates consistent with those in the second half of 2012, the company said.
Spirit builds parts of all Boeing and Airbus commercial airliners.