Aerospace demand drives increased 2025 forecast by Howmet, but share prices drop on apprehensions
Howmet Aerospace Boosts Revenue and Lifts Forecasts Amidst Boeing's 737 MAX Production Increase
Howmet Aerospace, a key supplier for Boeing, has seen a significant boost in revenue following the increase in Boeing's 737 MAX production. The company has added approximately $40 million in revenue from fastener orders secured after a competitor's plant fire in Pennsylvania.
The lift in forecasts is due to strong demand for Howmet's fasteners and engine components, as well as the increase in narrow-body jetliner production, particularly the Boeing 737 MAX. Boeing has already increased its output to 38 airplanes a month, but has built up substantial inventory. Howmet plans to support 737 MAX production at a rate of 33 aircraft a month.
The second-quarter revenue for Howmet Aerospace rose 9.2% to $2.05 billion, driven by an 8% increase in commercial aerospace sales. On an adjusted basis, the company earned 91 cents per share, surpassing expectations of 87 cents per share.
However, the growth is not without challenges. U.S. President Donald Trump's tariffs on aluminum and steel, along with levies on trading partners, have strained the aerospace supply chain and increased costs. Demand for Howmet's aerospace fasteners continued to grow during the last quarter, but the contributions to the company's bottom line were dampened by the tariffs.
J.P.Morgan analyst Seth Seifman stated that there is likely some conservatism in Howmet's outlook, especially for Q4. In response, the company has raised its annual adjusted profit forecast to between $3.56 and $3.64 per share, with an annual revenue projection of $8.13 billion, up by $100 million from previous estimates.
The FAA's cautious approach to raising production limits — requiring Boeing to meet specific key performance indicators and improve safety culture and supply chain oversight — means any impact on Howmet's revenue is likely gradual and subject to these production constraints. While Boeing’s increased 737 MAX production rate has supported stronger sales and deliveries, the FAA’s ongoing production limits and quality control emphasis temper this growth.
Despite these challenges, Howmet Aerospace's stock is up nearly 60% so far this year, reflecting investor confidence in the company's ability to navigate the complex aerospace industry. The company's positive financial performance and optimistic outlook bode well for its continued growth in the coming quarters.
- In light of the growth in Boeing's 737 MAX production, Howmet Aerospace, a key supplier, expects to maintain support for 33 aircraft a month, potentially increasing their revenue and contributing to the company's financial growth.
- The strong demand for Howmet's engine components and fasteners in the finance sector, coupled with the increased production of Boeing’s narrow-body jetliners, indicates a potential expansion of their business operations in the near future, catering to the aerospace industry.
