Northrop Keeps 2013 Outlook Amid U.S. Cuts as Profit Falls

Northrop Grumman Corp. (NOC), the maker of Global Hawk surveillance drones, reported first-quarter profit that beat analysts’ estimates while maintaining its full- year forecast amid U.S. budget cuts.

Net income from continuing operations fell 3.4 percent in the quarter to $489 million, or $2.03 a share, compared with $506 million, or $1.96 a share, a year earlier, the Falls Church, Virginia-based company said today in a statement. Analysts had predicted $1.73 a share, the average of 19 estimates compiled by Bloomberg. Sales fell 1.5 percent to $6.1 billion.

Northrop has divested low-margin businesses such as shipbuilding and reduced its workforce in anticipation of federal budget cuts. The company reaffirmed its 2013 forecast for profit from $6.85 to $7.15 a share made in January.

Northrop rose 3.2 percent to close at $73.77 in New York trading for the biggest single-day gain in more than nine months.

Across-the-board budget reductions known as sequestration began taking effect on March 1. They will strip $1.2 trillion from national security and domestic programs over nine years unless President Barack Obama and congressional Republicans agree to replace them with a broad bipartisan budget deal.

Photographer: SeongJoon Cho/Bloomberg

Northrop Grumman Corp., the maker of Global Hawk surveillance drones, has divested low-margin businesses such as shipbuilding and reduced its workforce in anticipation of federal budget cuts. Close

Northrop Grumman Corp., the maker of Global Hawk surveillance drones, has divested... Read More

Close
Open
Photographer: SeongJoon Cho/Bloomberg

Northrop Grumman Corp., the maker of Global Hawk surveillance drones, has divested low-margin businesses such as shipbuilding and reduced its workforce in anticipation of federal budget cuts.

The cuts were crafted as a penalty for failing to agree on a deficit-reduction strategy.

Aerospace Unit

While first-quarter revenue declined, sales in the company’s aerospace systems unit rose 4.3 percent due to more work tied to Lockheed Martin Corp. (LMT)’s F-35 jet, the Pentagon’s most expensive weapons system.

The company booked $1.3 billion last year for work on the F-35 jet, according to a federal regulatory filing. The program was protected in the president’s budget request for next year.

Lockheed, the world’s largest defense company, yesterday said its first-quarter profit beat analysts’ estimates as sales declined 2 percent compared with the same period a year earlier. It cautioned that the automatic budget reductions might push 2013 sales to the low end of its prior forecast.

To contact the reporter on this story: Nick Taborek in Washington at ntaborek@bloomberg.net

To contact the editor responsible for this story: Stephanie Stoughton at sstoughton@bloomberg.net

Bloomberg reserves the right to remove comments but is under no obligation to do so, or to explain individual moderation decisions.

Please enable JavaScript to view the comments powered by Disqus.