Northrop Grumman Corp., maker of Global Hawk surveillance drones, said fourth-quarter profit fell 2.7 percent and forecast 2013 earnings that exceeded analysts’ estimates.
Net income from continuing operations was $533 million, or $2.14 a share, compared with $550 million, or $2.09 a share, a year earlier, the Falls Church, Virginia-based company said today in a statement. Analysts estimated $1.74 a share, the average of 20 estimates compiled by Bloomberg. Sales fell less than 1 percent to $6.48 billion.
Northrop forecast a full-year profit from continuing operations of $6.85 to $7.15 a share on sales of about $24 billion. The Analysts surveyed by Bloomberg forecast a profit of $6.97 a share, on sales of $24.4 billion.
Chairman and Chief Executive Officer Wes Bush has divested low-margin businesses such as shipbuilding and has cut jobs to increase profit. Since 2008, Northrop has reduced “our headcount by 16 percent to 17 percent” and cut the square footage of facilities by about 12 percent, Bush told investors in November.
Northrop, like other U.S. defense companies, will be affected by across-the-board cuts in U.S. defense spending of $45 billion through September unless President Barack Obama and Congress agree by March on an alternative way to reduce the federal deficit.
Northrop said its 2013 forecast was based on the assumption that the automatic cuts, known as sequestration, won’t go into effect. U.S. Deputy Defense Secretary Ashton Carter said in an interview yesterday that such cuts were now “more likely than unlikely.”
Defense contractors Raytheon Co. and General Dynamics Corp. last week projected 2013 profits that fell below investors’ expectations, citing weak U.S. defense demand.
Lockheed Martin Corp., the world’s largest defense contractor, last week forecast profit for this year that exceeded analysts’ estimates, helped by tax credits that companies can claim for research and development. Under the tax deal signed by Obama earlier this month, companies are allowed to retroactively claim credit for 2012 spending as well as planned research expenditures this year.
Northrop rose less than one percent to $66.32 at the close in New York trading and has gained 14 percent in the past 12 months.