Lockheed Martin Corp reported a greater-than-expected 13% increase in quarterly profit and raised its full-year profit forecast as sales of its electronic defence systems and a one-time gain offset lower sales for its F-16 fighter jet programme.
The world's biggest defence contractor, in competition with Boeing Co and Northrop Grumman Corp, is the first of the major military firms to report second-quarter earnings, which are broadly expected to be higher as Pentagon spending shows no signs of weakening, despite some concerns that the next administration will cut into some big programmes.
The company reported a second-quarter profit of $882m, or $2.15 per share, compared with $778m, or $1.82 per share, in the year-earlier quarter.
The profit figure was inflated by a one-time gain of $0.14 per share related to a settlement with the US Government over the sale of some land several years ago.
Excluding that gain, Lockheed reported profit of $2.01 per share. That beat Wall Street's average forecast of $1.88 per share, according to Reuters Estimates.
Sales rose 4% to $11bn, helped by higher revenue in its electronic, information and space systems units.
Bethesda, Maryland-based Lockheed, which has been expanding its work in military and civilian electronics, had long expected a dip in sales of its older F-16 jet before its next-generation Joint Strike Fighter comes into full production over the next few years. Its other units have made up for the shortfall.
Factoring in the one-time land sale gain, lower interest expenses and improved performance in its main units, Lockheed raised its full-year earnings forecast to a range of $7.45 to $7.60 per share from its April forecast of $7.15 to $7.35 per share. Analysts are expecting $7.45 per share, on average.
"A reassuring Lockheed quarter," analyst Harry Nourse at Bank Of America said in a note to clients. "A nicely diversified spread of outperformance, and the raise to guidance comes in line with the Street's expectations." Nourse reiterated his "buy" rating on the stock.
Shares of Lockheed were up $1.46, or 1.4%, to $103.05 in Tuesday morning trading on the New York Stock Exchange. The stock is down 9% from its all-time high in October, hurt by broader concerns about the economy, but has outperformed the Standard & Poor's aerospace/defence index, which is down about 20% in the last nine months.
By Bill Rigby, Reuters
