Aerospace supplier Howmet raises profit forecast on robust parts demand
Updates shares in para 2, adds analyst comment in para 5, adds background in para 7, adds CEO quote in para 8
By Anandita Mehrotra
Nov 6 (Reuters) -Howmet Aerospace HWM.N raised its full-year profit forecast on Wednesday, driven by robust demand for its engine products from planemakers looking to cater to a surge in air travel demand.
Shares of the company, which counts both Airbus AIR.PA and Boeing BA.N as customers, jumped 9.3% to hit a record high of $111.7 amid a market rally, as third-quarter profit also topped estimates.
Howmet, one of the industry's main suppliers of aerospace castings, now expects 2024 annual adjusted earnings between $2.65 and $2.67 per share, up from its prior guidance of $2.53 and $2.57.
The company said next year's demand outlook for commercial aerospace remains robust, driven by healthy air traffic growth, and forecasts total revenue growth of about 7.5% year-over-year.
"Given that 2025 hasn't started yet and that management is known for conservatism, we think unevenness in the Aero supply chain this reporting period had already conditioned the market to see high-single-digits as the best possible outcome," said J.P. Morgan analyst Seth Seifman.
Howmet, which has posted upbeat results in recent quarters, said the nearly two-month long strike at Boeing and weakness in its European market shaved some sales in the three months through Sept. 30.
About 33,000 workers are set to return to their jobs at the U.S. planemaker after they voted to accept a new four-year contract earlier this week but uncertainty remains about the pace at which Boeing will ramp up production of its 737 series.
"I don't think it's clear to anyone yet the rate at which Boeing will build for November nor December or exactly what rate will be in 2025," Howmet CEO John Plant said in a post-earnings conference call.
In the third quarter, Howmet's commercial aerospace sales were up 17%, which helped boost the company's overall sales to $1.84 billion.
On an adjusted basis, the company earned 71 cents per share for the quarter, ahead of estimates of 65 cents according to data compiled by LSEG.
Reporting by Anandita Mehrotra in Bengaluru; Editing by Vijay Kishore and Krishna Chandra Eluri
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