(Reuters) – Canadian plane and train maker Bombardier Inc missed analysts’ estimates for quarterly core profit, hurt by delayed deliveries of its business jets due to the COVID-19 pandemic, and forecast business activity to plummet in the second quarter.
Business jet deliveries are expected to fall this year as the pandemic keeps people under a lockdown, disrupts global travel and slows down economic activity around the world.
The company said it expects business to hit a low point in the second quarter, before gradually recovering in the second half of the year.
“Bombardier has begun the gradual resumption of manufacturing operations at both Aviation and Transportation necessary to deliver on our strong rail backlog and to continue the production ramp-up of the Global 7500,” Chief Executive Eric Martel said in a statement.
The company said its aviation unit suffered a significant slowdown in orders in March, leading to a $13.6 billion business aircraft backlog at the end of the quarter.
Adjusted EBITDA margins at Bombardier’s aviation unit fell to 6.7% in the first quarter from 14.3% a year earlier, while those at its transportation segment dropped to 3.9% from 5.6%.
Bombardier reported negative free cash flow of $1.6 billion for the quarter ended March 31. The company had previously said it expects 2020 free cash flow, excluding certain items, to be positive.
Quebec, the Canadian province hit hardest by the coronavirus outbreak, last week said it would slowly reopen its economy in May while keeping some social restrictions to avoid possible flare-ups.
As one of Quebec’s biggest manufacturing firms, Bombardier has said it would gradually resume manufacturing on May 11.
The company’s adjusted earnings before interest, taxes, depreciation, and amortization fell 35.7% to $171 million from $266 million a year earlier.
Analysts on average had expected adjusted core earnings of $172.4 million, according to IBES data from Refinitiv.
(Reporting by Sanjana Shivdas in Bengaluru; Editing by Anil D’Silva and Maju Samuel)