(Updates stock price, details, adds byline, changes dateline, previous CHARLOTTE, N.C.)
By Mark Weinraub
NEW YORK, Oct 28 (Reuters) - Goodrich Corp. said on Monday that quarterly earnings fell as its commercial aircraft business slumped and warned that softness in the travel industry, which is decimating the profits of its airline customers, would cut into future profits.
The announcement sent shares of Goodrich, which have been falling sharply as the airline crisis worsened, to their lowest level in nearly 15 years.
The company, which makes aerospace and industrial parts, also said it expected to take a noncash charge to equity because the lagging stock market will likely cause its pension plan to be underfunded. Based on the plan's value in mid-October, the charge would be $285 million.
Pension funds, which were a source of strength in the bull market of the late 1990s, have darkened the forecast for many U.S. aerospace companies, but Goodrich is particularly vulnerable because of its commercial exposure. Defense contractors are able to pass along some of their pension expense to the government.
"Goodrich, as well as the entire industry, continues to experience weak market conditions in commercial aerospace that have negatively impacted our customers and demand for our products," Chairman and Chief Executive David Burner said in a statement.
The company's ongoing restructuring is expected to slash a total of 3,200 workers, up from its earlier estimate of 2,700 to 2,800, from Goodrich's payroll by the end of the year, saving the company more than $170 million before taxes. The company said it would look for more ways to cut costs because of the economic environment.
The company, which makes landing gear and de-icing systems for aircraft, said third-quarter net profit fell to $46.0 million, or 45 cents per share, from $88.0 million, or 83 cents a share last year. Sales fell to $882.1 million from $1.05 billion, Goodrich said.
Excluding items such as loss provisions for some Boeing Co. contracts and a gain from reserve adjustments, the company said it earned $51 million, or 50 cents per share in the third quarter. A year ago, the company's earnings, excluding items, were $83 million, or 77 cents a share.
Analysts were expecting the company to earn between 58 cents per share and 67 cents per share, with a mean estimate of 64 cents per share, according to research firm Thomson First Call.
Sales in all of Charlotte, N.C.,-based Goodrich's segments dropped. The firm's aero structures and aviation technical services unit, its largest business, saw revenue fall 27 percent to $269 million on the building slowdown in the commercial aircraft sector.
Goodrich forecast 2002 earnings per share excluding items of $2.30 on sales between $3.90 billion and $3.95 billion. The company said 2003 sales were expected to grow to $4.3 billion to $4.4 billion on the acquisition of TRW Inc.'s aeronautical systems unit but earnings per share should fall another 5 percent to 10 percent.
First Call listed analysts' 2002 earnings per share estimates in a range of $2.36 to $2.54, with a mean of $2.47. It said 2002 estimates were in a range of $2.10 to $2.90, with a mean of $2.50.
The integration of the TRW unit will hurt Goodrich's bottom line in 2003, but is expected to save the company $30 million to $40 million starting in 2005. Goodrich said it will not make any more significant acquisitions until the integration is complete.
Goodrich shares dropped 76 cents, or 4.61 percent, to $15.73 in late morning trade on Monday on the New York Stock Exchange. The stock had fallen to $14.55 earlier in the day, its lowest level since December 1987.
Goodrich's shares fell 30.9 percent during the third quarter, underperforming the Standard & Poor's Aerospace and Defense index , which gave up 17.6 percent of its value during the same time period.