Photo: Lockheed Martin
Lockheed Martin Corp, the largest U.S. weapons maker, on Wednesday posted an 11 per cent increase in third-quarter earnings, beating expectations by a wide margin, and raised its full-year forecast.Lockheed, which builds the next-generation F-35 fighter jet, warned that revenue would ease slightly in 2013, pulled lower by a mid-single-digit decline in sales at its information systems and global solutions business.
It raised its 2012 earnings forecast to a range of $8.20 to $8.40 from a range of $7.90 to $8.10.
Lockheed shares rose 1.5 per cent to $93.36 in early trading.
It said business segment operating profit would remain above 11 per cent of revenues next year, with aggressive cost-cutting to continue across the company, which also builds Aegis missiles, satellites and new coastal warships.
Net earnings per share rose 11 per cent to $2.21 in the third quarter from $1.99 in the year-earlier period, but they fell from $2.38 in the second quarter.
Analysts surveyed by Thomson Reuters I/B/E/S expected third-quarter earnings per share of $1.85 on revenue of $11.17 billion.
Revenue dropped 2 per cent to $11.87 billion in the quarter, from $12.1 billion in the third quarter of 2011.
Chris Kubasik, who will take over as chief executive next year, told reporters that 25 per cent of orders in the quarter came from international customers. That bolstered his confidence that Lockheed would reach its goal of boosting foreign sales to 20 per cent of total revenues in two years.
Lockheed, which receives more than 80 per cent of its revenue from the U.S. government, said its preliminary 2013 forecast assumed that Congress and the White House would avert $500 billion in additional, across-the-board defence cuts that are due to start taking effect in January.
If the cuts take effect, the company said they would have a material effect on its results.
Chief Executive Bob Stevens, who has been outspoken in his opposition to the indiscriminate nature of the cuts, said he expected Congress to address the additional defence budget cuts – which would come on top of $487 billion in cuts already on the books – when it returned after the November elections.
CASH FROM OPERATIONS JUMPS
Stevens, who retires at the end of the year, said Lockheed still planned to warn workers about possible layoffs linked to the budget cuts once it received guidance from the government.
At the same time, he said Lockheed continued to cut costs from operations wherever possible, and will keep trying to get leaner.
“There is more cost that we can take out of this business, working in conjunction with our customers,” Stevens told reporters.
Lockheed said cash from operations during the quarter reached $1.6 billion, compared with $551 million after pension contributions of $960 million during the third quarter of 2011.
Kubasik said Lockheed was making “good progress” on its biggest program, the F-35 fighter, and close to a “reasonable resolution” of its long-delayed talks with the Pentagon about a fifth batch of production planes.
He said the company was about 50 per cent done with work on the planes under a preliminary contract.
Chief Financial Officer Bruce Tanner said failure to reach an agreement before the end of the year would not have much impact on 2012 results, since the company’s work on the planes was already 75 per cent funded.
(Reporting by Andrea Shalal-Esa in Washington; Editing by Jeffrey Benkoe)
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