UPDATE 4-Bombardier profit jumps as bizjet orders rebound

* Q4 EPS $0.18 vs est $0.11

* Free cash flow $1.5 bln vs $512 mln year earlier

* Sets aerospace margin of 10 pct in 2013, 5 pct for 2011

* Order backlog grows to $50.1 bln from $43.8 bln

* Shares up 14 percent to C$7.16 on TSX
(Adds details from conference call, updates stock price. In
U.S. dollars unless noted)

By Susan Taylor and Bhaswati Mukhopadhyay

OTTAWA/BANGALORE, March 31 (Reuters) – Bombardier Inc
(BBDb.TO: Quote, Profile, Research) reported a bigger-than-expected quarterly profit on
Thursday as the world’s No. 3 civil aircraft maker got a lift
from lower taxes and financing costs, while business jet orders
picked up sharply after a two-year slump.

Bombardier, whose bigger rivals are Airbus (EAD.PA: Quote, Profile, Research) and
Boeing (BA.N: Quote, Profile, Research), also reported a three-fold jump in closely
watched free cash flow, to $1.5 billion in the quarter. Cash
reserves rose to $4.2 billion from $3.4 billion in the
year-before quarter.

“That becomes important because, looking forward, a large
use of that cash will be to fund future (aircraft) development
programs including the C-Series and Learjet 85 as well as other
aerospace programs, ” PI Financial analyst Chris Murray said.

Bombardier shares were up 86 Canadian cents at C$7.16 on
the Toronto Stock Exchange on Thursday afternoon.

Bombardier reported a net profit of $325 million, or 18
cents a share, for its fourth quarter, while analysts on
average were expecting 11 cents a share. [ID:nASA01UNG]

Revenue rose to $5.37 billion from $5.35 billion.

Montreal-based Bombardier, which is also the world’s
biggest passenger train maker, said its total backlog rose to
$50.1 billion at year-end from $43.8 billion in the year-before
quarter.

“The backlogs are healthy, most of the key trends appear to
be moving in a positive direction, and I think with the
strength of their performance in this quarter they certainly
have the financial capability to execute on some of those
growth strategies,” Murray said.

National Bank Financial analyst Cameron Doerksen bumped his
12-month stock target to C$8 from C$7.50 after the results.

“We expect an ongoing rebound in the business jet market as
well as potential new CSeries orders could drive the stock
higher in the coming months,” he said in a note.

RECENT RECOVERY

The business jet market fell hard in 2009 as companies cut
spending and tighter credit made purchases difficult, but it
has recently started getting back on track with the global
economic recovery.

Bombardier’s aerospace unit got a major lift this month
from a massive order of up to 120 business jets from Warren
Buffet’s NetJets Inc, a deal that could be worth as much as
$6.7 billion. [ID:nL3E7E20EN]

The company repeated on Thursday a forecast it made in
February that it will deliver 150 business jets and 90
commercial aircraft in calendar 2011, an estimate based on an
11-month financial year.

Orders for its regional planes will gradually recover in
2011 and increase “more significantly” in 2012, the company
said.

Bombardier said it will review production rates and demand
for its Q400 and CRJ passenger aircraft over the next two to
three months to determine if layoffs are required.

Development work continues on schedule for its new C-Series
narrow-body commercial jets, Bombardier said, with the first
flight scheduled in 2012 and the airliner going into service in
2013.

Aerospace sales in the quarter rose about 7 percent to $2.9
billion. The profit margin rose to $181 million, or 6.3 percent
of revenue, from $106 million, or 4 percent, in the same period
last year.

Bombardier set what it called an “aggressive” profit margin
target of 10 percent by 2013 from its aerospace unit. For
calendar 2011, the margin is seen at just 5 percent, due to a
change in accounting standards, and free cash flow is seen at
$1.5 billion.

Quarterly revenue at its passenger rail unit fell 7 percent
to $2.5 billion.

The company said revenue declined due to a currency hit
from a weaker euro and the wrap-up of some big projects in
Western Europe and Asia.

The division notched a 7.4 percent profit margin, advancing
toward the 8 percent target for 2013.

The rail unit, which has a record backlog of $33.5 billion,
saw its order intake surge to $3.4 billion in the quarter from
$1.8 billion last year.

($1=$0.97 Canadian)
(Reporting by Susan Taylor in Ottawa and Bhaswati Mukhopadhyay
in Bangalore; Editing by Unnikrishnan Nair and Peter Galloway)

UPDATE 4-Bombardier profit jumps as bizjet orders rebound