2 Pentagon Suppliers Report Strong Sales And Profit

2 Pentagon Suppliers Report Strong Sales and Profit

http://www.nytimes.com/2007/07/25/bu...=1&oref=slogin

By REUTERS
Published: July 25, 2007

The Lockheed Martin Corporation and the Northrop Grumman Corporation, two of the world’s biggest military contractors, reported higher-than-expected second-quarter profit yesterday as a result of strong fighter jet, technology and satellite sales.

Lockheed, the Pentagon’s No. 1 supplier, raised its full-year profit forecast well above Wall Street’s estimate, pushing its shares up nearly 4 percent, as defense spending shows no immediate signs of slowing.

“Lockheed’s results should satisfy even the highest expectations in the quarter given the blow-out results from better sales and operating performance across the business,” said Myles Walton, a CIBC World Markets analyst, in a research note.

Lockheed, which is also the world’s No. 1 defense contractor, reported a 34 percent increase in quarterly earnings, to $778 million, or $1.82 a share, compared with $580 million, or $1.34 a share, a year earlier.

Strong sales on its fighter jet programs — the F-16, F-22 and F-35 — and lower pension costs helped the bottom line.

Revenue rose 7 percent, to $10.7 billion, on higher sales in three of its four main units.

The results beat Wall Street’s average earnings forecast of $1.52 a share, on revenue of $10.28 billion.

Lockheed, which makes the Patriot missile, satellites and an array of government systems, raised its full-year earnings and revenue forecast, citing higher projected sales from its space and aircraft units.

Stock in Lockheed, which is based in Bethesda, Md., rose $3.57, to $103.09 a share.

Northrop, the No. 3 Pentagon supplier behind Lockheed and Boeing, posted a 7 percent increase in second-quarter profit, helped by higher information technology sales and an insurance gain at its shipbuilding unit.

It also raised the lower end of its full-year profit forecast as it projected higher sales overall and better margins.

Northrop, which makes warships, nuclear submarines, unmanned surveillance aircraft and a range of military electronics, reported quarterly profit of $460 million, or $1.31 a share, compared with $430 million, or $1.23 a share, a year earlier.

Revenue rose 4 percent, to $7.9 billion.

Results beat Wall Street’s earnings forecast of $1.23 a share, while revenue was slightly short of analysts’ average estimate of $8 billion.

Profit for the quarter was helped by a $62 million pretax insurance payout to compensate for profits lost after its gulf coast shipyards were devastated by Hurricane Katrina two years ago.

It also took a $27 million charge for work on Lockheed’s F-16 jet and a $55 million charge relating to the construction of an amphibious assault ship known as LHD 8.

Stock in Northrop, which is based in Los Angeles, fell $1.78, or 2 percent, to $77.30 a share.