Lockheed may revise 2014 outlook if U.S. budget deal passes

Mon Dec 16, 2013 6:47pm EST
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By Andrea Shalal-Esa

WASHINGTON (Reuters) - U.S. weapons maker Lockheed Martin Corp (LMT.N: Quote) may revise upward its financial outlook for 2014 if Congress passes a two-year budget deal that would blunt the effect of mandatory budget cuts, Marillyn Hewson, the company's president and chief executive officer, told Reuters on Monday.

Hewson said she hoped the U.S. Senate would approve the agreement, which was passed by the House of Representatives last week, and was optimistic that further cuts required under sequestration could be eliminated as the U.S. economy improved.

"We had factored sequestration in, so now that we have more input ... assuming that the budget gets approved, we'll have an opportunity to revisit what our outlook is," said Hewson, who will also assume the job of chairman of the company's board on January 1, a year after she became CEO.

Lockheed, the Pentagon's No. 1 supplier, has said that the budget cuts will knock about $400 million to $450 million from full-year revenues in 2013, and is currently forecasting a further slight decline in sales in 2014. Hewson said any revision in the company's guidance would come during the company's next earnings call in January.

The Senate is due to vote in coming days on the budget deal that passed the House 332-94 on Thursday. The measure would roughly halve $52 billion in automatic spending cuts facing the Pentagon in fiscal 2014, while providing additional relief from mandatory reductions in projected spending in 2015.

"I'm very encouraged by the budget deal," said Hewson. "It gives a lot more stability to us as an industry. It's certainly not everything that everybody wanted, but a very important compromise that moved things forward."

Lockheed, which builds everything from fighter jets to satellites and coastal warships, is aggressively pursuing sales in other countries and adjacent markets to offset the drop in U.S. military spending after a decade of sharp growth.

Hewson said Lockheed expected international sales to grow to 20 percent or more of total revenues from around 17 percent now. She said international sales would grow in absolute terms from $8 billion in 2012, not just as a percentage of sales.   Continued...

Newly elected Lockheed Chairman Marillyn Hewson comments during an interview with Reuters in Washington, December 16, 2013. REUTERS/Stelios Varias