Lockheed Profit Rises 4% as Full-Year Forecast Increased
Stock Chart for Lockheed Martin Corp (LMT)
Lockheed Martin Corp. (LMT), the world’s largest defense company, said second-quarter profit rose 4.4 percent and raised its full-year profit forecast.
Net income from continuing operations rose to $781 million, or $2.38 a share, from $748 million, or $2.16 a share, a year earlier, the company said today in a statement. The average estimate of 23 analysts surveyed by Bloomberg was for a profit of $1.91 a share. Sales increased 3.3 percent to $11.9 billion.
Full-year profit will be $7.90 to $8.10 a share compared with the forecast of $7.70 to $7.90 a share made in January, the company said. Analysts surveyed by Bloomberg forecast profit of $7.89 a share.
Lockheed delivered “a very solid quarter with both revenues and margins exceeding our expectations,” Joel Levington, a bond analyst at Brookfield Investment Management Inc. in New York said in an e-mail.
Lockheed rose 1 percent to $87.79 at the close in New York trading and has risen 8.5 percent this year.
Robert Stevens, 60, the chairman and chief executive officer, has spearheaded an industry effort to stave off U.S. defense budget cuts of $500 billion over a decade under a process called sequestration that would come on top of $487 billion the Pentagon already plans to cut from its proposed long-term budgets over that period. Stevens has said his company may have to fire as many as 10,000 workers if the automatic budget cuts go into effect in January.
“While the threat of sequestration has created uncertainty for our industry,” Lockheed has focused on reducing costs and program execution, Stevens said today in the statement.
Stevens has said he plans to retire as CEO in January to be replaced by Chris Kubasik, 51, currently the president and chief operating officer.
Congress may not pass the 2013 budget before the fiscal year begins Oct. 1, Bruce Tanner, Lockheed’s chief financial officer, said on a conference call with analysts. That would affect contract awards across the company because the Pentagon and other agencies would have to operate under a so-called continuing resolution at 2012 budget levels, Tanner said.
Lockheed’s Information Systems & Global Solutions unit is likely to be most affected by such a budget delay, Tanner said.
Lockheed continues to face pressures on its F-35 Joint Strike Fighter, the Pentagon’s single largest weapons program, even after the Defense Department lifted a probation on the short-takeoff-and-landing model in February. The U.K. reversed its decision against buying that model, the F-35B, and last week took delivery of its first test aircraft.
General Mark Welsh, President Barack Obama’s nominee for the next Air Force chief of staff, has said the F-35 assembly line and manufacturing are “not up to speed.”
Low-rate production orders of F-35 jets during the quarter contributed $200 million in additional sales to the Aeronautics unit, Bethesda, Maryland-based Lockheed said in the statement today. The unit’s sales rose $18 million, or less than 1 percent, to $3.41 billion, after a strike by members of the International Association of Machinists and Aerospace Workers slowed work at the company’s Fort Worth, Texas plant, Lockheed said. The labor dispute was settled June 28, the company said.
Aeronautics unit profit increased 14 percent to $454 million. Lockheed is making “slow and steady” progress in negotiations with the Pentagon for the fifth lot of trial F-35 airplanes, and both sides “have a desire to close” the deal soon, Tanner said.
Sales at the Electronic Systems unit, which makes anti- missile systems and oversees the Navy’s Littoral Combat Ship program, rose 2.3 percent to $3.87 billion because of the ship and the aerostat sensor program. Profit increased 10 percent to $526 million, the company said.
Space Systems sales increased 18 percent to $2.38 billion because of increased commercial satellite deliveries, Lockheed said. Unit profit rose 7.2 percent to $282 million.
Sales at the Information Systems & Global Solutions unit fell 4.1 percent to $2.3 billion. Profit at the unit, which provides information-technology services to U.S. agencies including the Pentagon, fell 2.3 percent to $208 million.
Lockheed’s discontinued operations included the Pacific Architects & Engineers unit that was sold in April 2011 and Savi Technology Inc.
To contact the reporter on this story: Gopal Ratnam in Washington at firstname.lastname@example.org
To contact the editor responsible for this story: John Walcott at email@example.com
Bloomberg reserves the right to edit or remove comments but is under no obligation to do so, or to explain individual moderation decisions.