A robust flow of bookings from B/E Aerospace’s supplier furnished equipment (SFE) backlog is being cited by the aircraft interiors giant as a key driver in achieving forecasted revenues of about $3.35 billion in 2013 or 10% higher than expected revenues for 2012.
B/E was recently contracted as the exclusive manufacturer of modular lavatory systems for Boeing’s 737 family and the forthcoming re-engined 737 Max, in a move that displaced incumbent supplier Yokohama Rubber Company of Japan. The award is valued at $800 million-plus over the life of the programme.
The manufacturer also holds a $1 billion-plus contract with Airbus to provide – as single source – an innovative new galley system for the Airbus A350 XWB. The system is designed to accommodate the airliner’s ‘flex zones’, which allows operators to select from a wide-ranging catalogue of pre-engineered galley configurations. B/E is also a supplier of the passenger and crew oxygen systems for the A350, and is among the providers of economy-class seats, and galley inserts for the widebody (it is offering its highly-acclaimed Essence line of inserts).
During a conference call to discuss a 21.1% improvement in third quarter net earnings to $79.2 million (adjusted to exclude one-time debt prepayment costs, and acquisition, integration and transition costs), B/E co-founder, executive chairman and CEO Amin Khoury noted that the company’s total backlog by the end of the third quarter – both booked, as well as awarded but un-booked – of $8.25 billion represented a 19% improvement year-over-year.
“And so the flow of bookings comes not only from bookings from the customers on new programmes, but also a flow of bookings from the SFE backlog. And we expect to begin delivering in 2013 for the first time [737] lavatories – modular lavatories in a huge programme, an $800 million programme – and have very substantial shipments of both lavs and also galleys, the new [A350] galley systems in 2014,” says Khoury.
He says B/E will begin shipping the A350 galleys “well in advance of the deliveries” of the widebody because Airbus is “going to need to have a lot of products on hand before they actually have the entry into service date”.
Adds Khoury: “So I think that our expectation for the 10% top line growth rate – the compounded growth rate of 10% is related to the 14% CAGR (compound annual growth rate) in widebody deliveries, a flow of orders from our SFE backlog and a turnaround in the aftermarket environment.”
B/E recently opened a new Philippines-based manufacturing complex, which will produce both the A350 galleys and the 737 modular lavatories. “Our new footprint in the Philippines is indicative of our commitment to both our SFE systems business and our long-term strategic position in Asia,” says B/E president and chief operating officer Werner Lieberherr.
Overall, B/E is confident it will deliver double-digit revenue growth over the next several years. The company expects to see modest improvement in aftermarket demand in 2013, followed by strong improvement in 2014.
Also boding well for B/E is the growing backlog of A350 orders at Airbus; the widebody is scheduled to enter into service in 2014. Singapore Airlines today announced it will order 25 more widebodies, comprising five double-deck A380s and 20 A350-900s. You can see a computer generated view of A350 assembly in the following video. Cabin customisation begins at around minute 2:00.
October 24, 2012
Interiors