April 23 (Bloomberg) -- Northrop Grumman Corp., the fifth-largest U.S. government contractor, beat analysts’ estimates for the first quarter and boosted its profit forecast for the year.
Net income from continuing operations surged 18 percent to $579 million, or $2.63 a share, in the quarter, compared with $489 million, or $2.03 a share, a year earlier, the company said today in a statement. The average estimate of 19 analysts surveyed by Bloomberg was $2.15 a share.
Northrop benefited from a tax benefit of $51 million, or 23 cents a share, in the quarter, along with higher operating profit in its aerospace unit. The maker of Global Hawk drones raised its 2014 profit forecast to $8.90 to $9.15 a share, from the outlook in January of $8.70 to $9 a share. It affirmed its January estimate of $23.5 billion to $23.8 billion in 2014 sales.
Sales fell 4.2 percent to $5.85 billion in the quarter from a year earlier.
Northrop rose 1.6 percent to close at $121.66 in New York. It has climbed 70 percent in the past 12 months, compared with a 19 percent increase in the Standard & Poor’s 500 Index during the same period.
Military contractors’ sales have been falling as the government slows spending and winds down the war in Afghanistan. Federal budget reductions last year contributed to the fourth consecutive annual decline in government contracting, the longest stretch since Ronald Reagan was president.
“We continue to see lower volume for programs associated with in-theater troop withdrawals, program ramp-downs and program transitions,” Wesley Bush, Northrop’s chairman and chief executive officer, said on a conference call with investors. “Growth in our international business is partially offsetting these impacts.”
In January, President Barack Obama signed a $1.1 trillion spending bill to fund the government through Sept. 30 and alleviate some of the cuts due to take effect under a process known as sequestration.
Northrop, based in Falls Church, Virginia, may get a boost from the president’s budget request for the year beginning Oct. 1. The proposal calls for keeping the company’s Global Hawk drones and phasing out the manned U-2 spy plane. That was a reversal of a previous proposal favoring the Lockheed Martin Corp. U-2 over the Global Hawk Block 30.
Northrop increased its political action committee donations and its lobbying expenses as it successfully pressed Congress to reject the Pentagon’s earlier proposals to ground the Block 30 drones amid the defense reductions.
The contractor spent $20.6 million on lobbying last year, more than any other company, according to the Center for Responsive Politics, a Washington-based research group.
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