Northrop Grumman has reported a 4% drop in third-quarter 2021 sales due to operational distress caused by Covid-19 induced supply chain challenges.

The company’s sales totalled $8.7bn in the three-month period to 30 September 2021, decreasing by $363m from $9.1bn recorded in the third quarter of 2020.

In addition to supply chain-related challenges, the company attributed the decrease to a tight labour market and an increase in employee leave due to the pandemic.

All its business segments except for Space Systems also recorded a fall in quarterly sales.

However, Northrop’s transaction adjusted net earnings increased from $986m to $1.06bn on a year-on-year basis.

The company’s total operating income was $1.04bn in Q3 2021, up from $985m in the prior-year quarter. The increase was primarily due to lower unallocated corporate expenses.

Quarterly sales in Aeronautics Systems dropped 6% to $2.73bn in Q3 2021 from $2.91bn in Q3 2021.

Defense Systems recorded a 24% drop in quarterly sales to $1.4bn while Mission Systems’ sales totalled $2.44bn after falling 5% on a year-on-year basis.

The lower sales at Defense Systems and Missions Systems were due to the divestiture of the IT services.

Meanwhile, Space Systems’ sales jumped 22% to $2.68bn.

Northrop Grumman chairman, CEO and president Kathy Warden said: “Our third-quarter results reflect strong program performance and the continued focus on operational excellence by the Northrop Grumman team.

“While we did see some labour-related and supply chain challenges stemming from the Covid-19 pandemic on our operations, we delivered solid organic growth, outstanding segment operating margins and strong transaction-adjusted free cash flow in the quarter.

“We are raising our full-year earnings guidance and continue to expect strong organic sales growth.”