Raytheon Boosts Outlook as Profit Beats Analyst Estimates
Raytheon Co. (RTN), the world’s largest missile maker, raised its full-year earnings outlook as international defense sales helped it beat analysts’ second-quarter profit estimates.
Raytheon’s net income from continuing operations rose 3.4 percent to $488 million, or $1.50 a share, from $472 million, or $1.41 a share, a year earlier, the company said today in a statement. Analysts had predicted $1.30 a share, the average of 19 estimates compiled by Bloomberg. Sales rose 2.1 percent to $6.12 billion.
The contractor forecast full-year profit of $5.51 to $5.61 a share, up from $5.26 to $5.41 predicted in April, amid a slowdown in U.S. defense spending.
“We’re very prepared for the environment that we are now in,” Dave Wajsgras, chief financial officer of Waltham, Massachusetts-based Raytheon, said today in a phone interview.
Raytheon rose less than 1 percent to $69.77 at 10:02 a.m. in New York trading.
International sales rose 10 percent in the quarter from a year earlier, and overseas sales will account for 28 percent of revenue this year, up from 26 percent in 2012, Wajsgras said.
In raising the profit forecast for the year, Wajsgras cited “improved results” from a consolidation of the company’s business units that was announced in March.
Raytheon followed industry peers such as General Dynamics Corp. (GD), Northrop Grumman Corp. (NOC) and Lockheed Martin Corp. (LMT), which also reported second-quarter profit that exceeded analysts’ estimates.
The companies have thrived, outperforming the Standard & Poor’s 500 Index this year even as automatic U.S. budget cuts began hitting the Pentagon in March. Raytheon rose 21 percent this year through yesterday, compared with the S&P’s 18 percent gain.
International sales of air and missile defense offerings helped the contractor boost profit by 21 percent at its Integrated Defense Systems unit in the quarter from a year earlier, according to the statement.
While the company’s profits and sales rose, order backlog declined 4.4 percent to $32.4 billion in the quarter, compared with $33.9 billion a year earlier.
The company continues to expect that automatic federal budget cuts under a process known as sequestration will reduce sales by $400 million this year and bookings by $500 million, Wajsgras said.
“We did see some delays in the second quarter relative to domestic awards that we now expect in the back half of the year,” he said.
The across-the-board budget 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.
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