Lockheed profit beats view; budget cuts hit sales outlook

Tue Apr 23, 2013 8:51am EDT
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By Andrea Shalal-Esa

WASHINGTON (Reuters) - Lockheed Martin Corp, the Pentagon's biggest weapons supplier, reported a better-than-expected 14.8 percent rise in per-share earnings on Tuesday but warned that full-year revenue was likely to come in at the low end of earlier guidance due to U.S. budget cuts.

Lockheed is the first of the big U.S. weapons makers to report first-quarter earnings. Analysts have forecast lower sales and earnings across the sector as U.S. military spending declines after more than a decade of sharp growth.

Lockheed, which builds F-35 fighter jets, Aegis missiles and new coastal warships, said revenue for the full year would be at the low end of the $44.5 billion to $46 billion range forecast in January, with the additional budget cuts seen reducing net sales by about $825 million.

But the company stood by its previous guidance for full-year operating profit and earnings per share, citing stronger-than-expected results in all five of its business sectors in the first quarter.

Helped by a lower tax expenses, first-quarter net profit rose to $761 million, or $2.33 per share, from $668 million, or $2.03 a share, a year earlier. Revenue dropped 2 percent to $11.1 billion.

Analysts polled by Thomson Reuters I/B/E/S had expected earnings of $2.04 per share on revenue of $10.3 billion.

Sales in its biggest division, aeronautics, dropped 14 percent, mainly due to lower deliveries of F-16 fighter jets, while sales in the missiles and fire control division rose 13 percent.

"While the impact on our business has been limited to date, we continue to work closely with our customers to better understand the future impact sequestration may have on our programs," Lockheed Chief Executive Marillyn Hewson said in a statement, referring to across-the-board federal spending cuts.   Continued...

Workers can be seen on the moving line and forward fuselage assembly areas for the F-35 Joint Strike Fighter at Lockheed Martin Corp's factory located in Fort Worth, Texas in this October 13, 2011 handout photo provided by Lockheed Martin. REUTERS/Lockheed Martin/Randy A. Crites/Handout