Raytheon Co. (RTN), the world’s largest missile maker, beat analysts’ profit estimates for the fourth-quarter even as sales dropped amid U.S. budget cuts.
Net income from continuing operations rose less than 1 percent to $467 million, or $1.46 a share, in the quarter, compared with $466 million, or $1.41 a share, in the year-earlier period, the Waltham, Massachusetts-based company said in a statement. The average estimate of 19 analysts surveyed by Bloomberg was $1.35 a share.
Sales fell 8.8 percent to $5.87 billion in the quarter. All four divisions reported sales declines, led by an 11 percent plunge in space and airborne systems.
Raytheon rose 3.7 percent, the most since Nov. 30, 2011, to close at $91.89 in New York. The company has climbed 70 percent in the past 12 month, compared with a 19 percent increase in the Standard & Poor’s 500 Index.
The company forecast 2014 earnings of $6.74 to $6.89 a share. Adjusting for a one-time tax credit, the forecast of $6.49 to $6.63 exceeded the $6.27-a-share average estimate of 19 analysts surveyed by Bloomberg. Sales are projected to decline to $22.5 billion to $23 billion, compared with $23.7 billion in 2013, the contractor said.
Raytheon has cut costs, reducing the number of employees last year to 63,000 from 68,000, Dave Wajsgras, chief financial officer, said in a phone interview today. The company also is consolidating facilities, he said.
“Our company is keenly focused on staying in front of the cost curve,” Wajsgras said.
For the year, sales declined 2.9 percent. A 3 percent increase in international revenue didn’t make up for eroding domestic sales, which included the effects of automatic federal cuts, a partial government shutdown in October and a temporary U.S. spending bill.
Wajsgras said he expected the domestic market to improve in the second half of this year and that international sales, especially in the Middle East, will be strong in 2014.
He cited a Patriot missile defense contract with Kuwait valued at as much as $600 million that he expects to be signed next month and the Jan. 23 announcement of a $1.3 billion deal with Oman for a ground-based air defense system.
Bill Swanson, Raytheon’s chairman and chief executive officer, told investors on a conference call today that he expected 30 percent of Raytheon’s sales in 2014 to be international, up from 27 percent last year.
Raytheon’s backlog decreased 6.9 percent to $33.7 billion at the end of 2013 from a year earlier.
The top federal contractor, Lockheed Martin Corp. (LMT), said on Jan. 23 that its fourth-quarter profit dropped 14 percent as U.S. budget cuts sapped its sales and contributed to a goodwill writedown and job-reductions charge.
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