Lockheed Martin raises outlook despite cuts to defence spending

City A.M. Reporter
LOCKHEED Martin, the biggest supplier to the Pentagon, reported higher third-quarter profit yesterday despite a four per cent drop in sales, and lifted its forecast for full-year earnings, even as US military spending is reduced.

Lockheed said mandatory budget cuts that took effect in the 2013 financial year would knock about $400m (£246m) to $450m from full-year revenues, just over half of what the company first projected.

Lockheed, which builds F-35 fighter jets, satellites, missile defence systems and coastal warships, said uncertainty about future US budget levels was limiting its ability to make needed investments.

Lockheed said net earnings from continuing operations rose 15 per cent to $842m from $727m a year earlier despite military spending cuts. Earnings per share rose 16.3 per cent to $2.57

The company forecast consolidated operating profit ranging from $4.625bn to $4.775bn for the full year, up from an earlier forecast of $4.55bn to $4.7bn. It sees earnings per share of $9.40 to $9.70, up from $9.20 to $9.50.

Finance chief Bruce Tanner told reporters that Lockheed had maintained strong earnings in the third quarter by such measures as consolidating facilities and laying off workers. Revenues were projected to reach about $45bn in the full year, just over the low end of the earlier forecast range of $44.5bn to $46bn, he said.

Tanner said the company had a backlog of $79bn, giving it “a real strong footing” for the future.

Chief executive Marillyn Hewson said she was heartened that Congress agreed to raise the US debt ceiling and fund the government through next January, but urged lawmakers to find a better solution to fiscal challenges than across-the-board cuts required under sequestration.