Raytheon Co. (RTN) (RTN), the world’s largest missile maker, is turning to exports of products such as combat jet radars and Patriot air-defense systems to prop up revenue as the U.S. curbs defense spending.
International sales should increase for at least another three to five years, Chief Financial Officer David Wajsgras said yesterday in an interview at the Paris Air Show. “There are some large opportunities.”
Exports are gaining prominence for Raytheon with U.S. military budgets at risk of automatic cuts beyond those that forced the Waltham, Massachusetts-based company to pare its full-year sales forecast. Foreign programs accounted for 26 percent of Raytheon’s fiscal 2012 revenue, up from 16 percent in 2002, according to data compiled by Bloomberg.
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“There is some level of uncertainty with respect to the growth profile of our domestic product areas,” Wajsgras said. “Exports may well be enough to continue to translate to cash and earnings growth.”
Raytheon, which won a competition to supply South Korea’s F-16 jet fighters with advanced radar, now awaits a decision by Taiwan in a competition with Northrop Grumman Corp. (NOC), he said. That selection may come this year in conjunction with a U.S. Air Force decision on upgrading its F-16s.
European government cutbacks should have little effect, he said, because most of Raytheon’s overseas business is focused on the Middle East and Pacific Rim countries.
Raytheon’s revenue may be $23.5 billion in the current fiscal year, according to analysts surveyed by Bloomberg, 3.7 percent less than in fiscal 2012. The shares gained 18 percent this year through yesterday, closing at $67.78, to outpace a 15 percent advance for the Standard & Poor’s 500 Index.
Wajsgras said Raytheon has reduced indirect expenses, such as information-technology spending, by about $500 million in the past two years.
“There is still tremendous opportunity for our company, and I would suggest for the industry, to continue to improve from a productivity standpoint,” Wajsgras said.
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