Supplier TransDigm forecasts annual profit below estimates on jet production risks (updated)

TransDigm Incorporated

07/11/2024 18:06

(Adds company comments in paragraphs 3,6, updates share
movement in paragraph 2)
    By Anandita Mehrotra
       Nov 7 (Reuters) - Aerospace supplier TransDigm Group
 TDG.N  on Thursday forecast its annual profit and revenue below
analysts' expectations and highlighted risks around the pace of
commercial jetliner production as the industry battles
persistent supply shortages.
    Shares of the company, which supplies aircraft components
such as cockpit security systems and engine sensors for
commercial and military jets, were down 4.5%.
    The company said it had initiated cost reduction measures
such as furloughs and headcount reductions in recent weeks.
    While TransDigm has predominantly benefited from booming
demand for repairs on older jets in recent quarters, it also
sells parts for new jets to planemakers Boeing  BA.N  and Airbus
 AIR.PA .
    Boeing is working to emerge from a recent crisis after a
near two-month walkout by about 33,000 workers halted production
of most of its jets, with uncertainty prevailing on the
company's production targets in 2025. Its rival Airbus continues
to struggle with its own parts pressures.
    "The lingering effects of the recently resolved Boeing
strike has pushed OEM recovery further to the right," a company
executive said on a post-earnings call.
    TransDigm expects the rise in sales to jet makers in 2025 to
be slower than that in its aftermarket business.
    "The commercial OEM guidance contains an appropriate level
of risk around the expected OEM production build rates for
fiscal 2025," it said in a statement.
    The Ohio-based supplier expects its fiscal 2025 adjusted
profit per share to be between $35.36 and $37.28, compared with
analysts' average estimate of $39.01, according to data compiled
by LSEG.
    It also forecast annual sales of $8.75 billion to $8.95
billion, the midpoint of which is below expectations of $8.92
billion.
    For the fourth quarter, it posted an adjusted per-share
profit of $9.83, above analysts' expectations of $9.29.
    Net Sales for the quarter through Sept. 30 jumped 18% to
$2.19 billion, edging past estimates of $2.17 billion.

 (Reporting by Anandita Mehrotra in Bengaluru; Editing by Shilpi
Majumdar)
 ((Anandita.Mehrotra@thomsonreuters.com))