Business

July 24, 2013

Lockheed Martin second quarter withstands budget cuts

Lockheed Martin raised its profit guidance for the year after posting a higher-then-expected second-quarter profit because of strong sales of missile defense systems, and because it settled a dispute over a canceled project to build the new presidential helicopter.

Just three months ago, the maker of fighter jets, missiles and other defense goods had warned that results for this year could be hurt by automatic federal budget cuts. And, indeed, those cuts pushed second-quarter revenue down 4.3 percent, to $11.41 billion, from $11.92 billion a year earlier.

But some key programs at Lockheed benefited even while the rest of the industry is enduring the defense slowdown:

  • The U.S. is planning to end funding for the Medium Extended Air Defense System, which could eventually hurt Lockheed Martin. But in the meantime, the shift away from MEADS is boosting sales of the Patriot missile defense system. Lockheed makes the Patriot Advanced Capability-3 missiles. Operating profits jumped in Lockheed’s Missiles and Fire Control unit, to $381 million, from $313 million a year ago.
  • Lockheed got a $75 million profit boost after settling “contract cost matters” including the canceled program to build a new helicopter for the U.S. president. The program was canceled in 2009 after delays and budget overruns.
  • Deliveries of the new F-35 Joint Strike Fighter are ramping up. Lockheed handed over 12 in the most recent quarter, up from three a year earlier. The gains with the F-35 mitigated a profit decline in Lockheed’s Aeronautics unit, which is seeing a slowdown in its aging F-16 fighter.

The company earned $859 million, or $2.64 per share, for the quarter that ended June 30. That was up from $781 million, or $2.38 per share, during the quarter that ended June 24 last year. Analysts surveyed by FactSet had been expecting a profit of $2.20 per share, with revenue of $11.14 billion.

Lockheed boosted its 2013 profit outlook, saying it now expects to earn $9.20 to $9.50 per share, up from previous guidance of $8.80 to $9.10 per share. It left its revenue outlook unchanged at $44.5 billion to $46 billion.

Analysts had expected a 2013 profit of $9.02 per share on revenue of $44.88 billion. AP




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