Boeing's gross profit margin declined by 1.09 percentage points in Q3 2024 compared to the same period in the previous year, according to the latest data available1. This decline can be attributed to several factors:
- Supply Chain Challenges and Production Setbacks: Boeing has faced significant production challenges, including quality control issues and shortages of critical components, particularly with its 737 Max and 787 Dreamliners. These issues have led to lower commercial deliveries and higher period costs, including R&D, which have impacted gross profit2.
- Losses on Defense Programs: The company has also experienced significant losses on fixed-price defense development programs, reflecting lower commercial deliveries and unfavorable working capital timing. These losses contribute to a reduction in gross profit margin2.
- Strategic Decisions and Investments: Boeing's strategic decisions and investments, such as the planned acquisition of Spirit AeroSystems, may in the short term impact gross profit margin as they require significant financial commitments2.
In summary, Boeing's decline in gross profit margin in Q3 2024 is primarily due to supply chain challenges, losses on defense programs, and strategic investments.