July 24 (Bloomberg) -- Northrop Grumman Corp., the maker of Global Hawk surveillance drones, raised its profit forecast as F-35 jet work helped boost sales and profit in the second quarter.
The company’s earnings exceeded analysts’ estimates. Net income from continuing operations rose 1.7 percent in the quarter to $488 million, or $2.05 a share, from $480 million, or $1.88 a share, a year earlier, Northrop said today in a statement. The average estimate of 19 analysts surveyed by Bloomberg was $1.71 a share.
The results included a pretax charge of $30 million, or 8 cents a share, mostly related to premiums paid to redeem $850 million in debt. Sales rose less than 1 percent to $6.29 billion.
Northrop, based in Falls Church, Virginia, said it expects profit of $7.60 to $7.80 a share this year, compared with a prior forecast of $6.85 to $7.15 a share. The company is the fifth-largest U.S. government contractor.
The contractor’s aerospace revenue rose 9 percent, mostly because of increased production of F-35 jets, according to the statement. Northrop subcontracts with Lockheed Martin Corp. on the program, which is the Pentagon’s most expensive weapon system.
Northrop booked $1.3 billion last year for work on the F-35 jet, according to a regulatory filing.
Sales at the company’s Information Systems unit dropped 9 percent in part because of “lower funding levels and contract completions across the portfolio,” according to the statement.
Northrop has divested low-margin businesses such as shipbuilding and has cut its workforce in anticipation of federal budget cuts.
Pentagon programs are being sliced by $37 billion this fiscal year under a process known as sequestration that began March 1 after President Barack Obama and Congress failed to reach a broader deficit-reduction agreement.
Northrop rose 1.7 percent to close at a record $90.30 in New York and has advanced 34 percent this year.
Lockheed Martin Corp., the world’s largest defense contractor, raised its full-year profit forecast yesterday as it reported second-quarter earnings that beat analysts’ estimates.
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