By Shreyasee Raj
(Reuters) -Textron Inc on Thursday raised its full-year profit forecast, propelled by a rebound in demand for its small and medium business jets as accelerated COVID-19 vaccinations encourage more people to fly.
Shares of Textron rose 3% to more than two-year high of $63.56 after the company also beat earnings estimates for the first quarter ended April 3.
As more economies recuperate from the health crisis and return to growth, sales of small and mid-sized jets are expected to recover faster than that of larger and more expensive jets.
Textron said it now expects 2021 adjusted earnings of $2.80 to $3 per share, up from the earlier forecast of $2.70 to $2.90.
“Overall demand environment is more positive. More people are looking to acquire aircraft than we’ve seen in quite some time,” Chief Executive Officer Scott Donnelly said in a post-earnings call with investors.
Donnelly said demand is still predominantly driven by a lot of personal travel but “the corporate aviation departments are starting to come alive.”
Textron’s business jet deliveries rose to 28 units in the first quarter, from 23 units a year earlier. Deliveries had fallen 14% in the prior quarter.
Sales in the aviation division, the company’s biggest, fell marginally to $865 million from $872 million a year earlier due to lower demand for aftermarket servicing, compared with a 9.7% decline in the fourth quarter.
Aviation’s order backlog at the end of the quarter rose $2.1 billion, from $1.6 billion in the fourth quarter. The unit, which makes Beechcraft and Cessna aircraft, contributed more than a third to the company’s total revenue in 2020.
Total revenue rose 3.6% to $2.88 billion and beat Wall Street estimates of $2.73 billion, while profit tripled to $171 million. Adjusted earnings per share of 70 cents beat estimates of 47 cents.
(Reporting by Shreyasee Raj in Bengaluru; Editing by Shinjini Ganguli)