(Reuters) - Canada’s Bombardier Inc cut its full-year profit and revenue forecasts on Thursday as it wrestled with production challenges in its key railcar-making unit, rattling markets ahead of the company’s annual general meeting next week.

FILE PHOTO: Logo of Bombardier is seen at an office building in Zurich, Switzerland, February 28, 2019. REUTERS/Arnd Wiegmann/File Photo

The company’s shares were down more than 18 percent in afternoon trading in Toronto.

Bombardier slashed its full-year revenue forecast by almost 8 percent to about $8.75 billion for its transportation business, the plane-and-train-maker’s largest division by sales. The division is crucial to a five-year plan to turn around Bombardier, after heavy investment in plane production drove the company to the brink of bankruptcy in 2015.

The rail unit, which is expected to generate $10 billion, or half of the company’s revenue in 2020, has been dogged by contracts delays that heavily contributed to disappointing free cash flow in 2018 and a subsequent selloff of Bombardier stocks and bonds.

Bombardier’s decision to trim 2019 revenue estimates by $1 billion to $17 billion spooked bondholders on Thursday.

The yield on Bombardier’s March 2025 U.S. dollar bond, which carries a 7.5 percent coupon and has $1.5 billion outstanding, jumped by as much as 55.5 basis points to 7.346 percent, the biggest rise since the bond was issued more than four years ago, according to Refinitiv Eikon data.

Bombardier’s “revelation this morning on weaker, expected transport revenue, came as a negative surprise to the market,” wrote Citi analyst Stephen Trent, while noting that the company was still expecting improved free cash flow.

“Although the company’s transport segment has been relatively stable in recent years, it would be unreasonable to dismiss the possibility of addition volatility from this segment.”

Canadian pension fund Caisse de depot et placement du Quebec, which holds almost a third of Bombardier’s rail division, declined to comment.

While the company has made progress on a New York contract, it remained dogged by at least three orders in Europe during the first quarter. Swiss Federal Railways has so far declined to take delivery of more than 12 Bombardier trains in a total order of 62 because the ones in service did not meet expectations.

Swiss said by email it would announce on May 1 when the trains would be delivered.

Bombardier, which also cut revenue for its commercial aircraft business by $250 million to $1.15 billion, said it expects to deliver only 30 commercial planes in 2019, compared with the 35 it previously expected, since the deal is closing earlier than anticipated. Five of the aircraft will be delivered after the planned sale of its Q400 turboprop business closes at mid-year.

Bombardier expects adjusted core earnings to range between $1.50 billion and $1.65 billion, compared with its prior expectation of $1.65 billion to $1.8 billion. The company, however, maintained its full-year earnings forecast for its aerospace business and continues to expect break-even free cash flow, plus or minus $250 million.

Bombardier will report first-quarter earnings on May 2.Bombardier estimated lower-than-expected adjusted core earnings, operating earnings and revenue for the first quarter, because of delayed aircraft deliveries, slower project ramp-up at its transportation business and unfavorable currency swings. It now expects revenue of about $3.5 billion for the three months through March 31, well below analysts’ estimate of $4.03 billion, according to IBES data from Refinitiv.

Adjusted core earnings of $265 million is expected to miss estimates by 21 percent, while operating earnings of $170 million would be 26 percent lower than analysts’ estimates, according to the data from Refinitiv.