General Dynamics Quarterly Profit Rises as Sales DeclineNick Taborek
General Dynamics Corp., the maker of Abrams tanks and Gulfstream business jets, rose the most in four years after beating analysts’ estimates for first-quarter profit.
Net income from continuing operations increased 1.2 percent to $571 million, or $1.62 a share, compared with $564 million, or $1.57 a share, a year earlier, the Falls Church, Virginia-based company said today in a statement. Analysts forecast $1.50 a share, the average of 19 estimates compiled by Bloomberg. Sales fell 2.3 percent to $7.4 billion.
General Dynamics rose 6.9 percent to close at $71.73 in New York trading, the biggest one-day gain since January 2009.
The company is focusing on cost-cutting and increasing margins after reporting a $2.1 billion fourth-quarter loss that new Chief Executive Officer Phebe Novakovic attributed to ill-advised acquisitions and declining defense spending. The company didn’t alter its 2013 forecast for profit of $6.60 to $6.70 a share made in January.
“General Dynamics’ first-quarter performance reflects our continued focus on operations, cost improvement and cash generation, as well as our commitment to meeting our customers’ requirements,” Novakovic said in the statement.
Analysts had predicted sales of $7.54 billion, the average of 16 estimates compiled by Bloomberg.
Automatic U.S. budget cuts took effect March 1. The across-the-board reductions were crafted by President Barack Obama and congressional Republicans as a penalty for failing to agree on a deficit reduction strategy. They will strip $1.2 trillion from national security and domestic programs over nine years unless a compromise is reached.
Lockheed Martin Corp., the world’s largest defense company, said yesterday its first-quarter profit beat analysts’ estimates as sales declined 2 percent compared with a year earlier. Lockheed cautioned that the automatic budget reductions may push 2013 sales to the low end of its prior forecast.