General Dynamics CEO sets sights on further growth, acquisitions
By Andrea Shalal-Esa
WASHINGTON (Reuters) - The defense budget is shrinking, but General Dynamics Corp (GD.N: Quote) still sees growing demand for its combat vehicles and warships, coupled with unprecedented opportunities to sell its popular Gulfstream business jets in China and other emerging markets.
Chief Executive Jay Johnson, a former F-14 fighter pilot and chief of naval operations, shies away from phrases like "off the charts," but his steep hand gesture depicts a bright future for the commercial aerospace sector, and he's not too worried about the defense outlook, at least for now.
In fact, tighter U.S. defense budgets will generate good acquisition opportunities for General Dynamics in coming years, Johnson told Reuters in a rare interview at the company's headquarters in Falls Church, Virginia.
"We don't have time to wring our hands. For us it's all about performing for the customer and delivering to the shareholder," says Johnson, who said the company remained committed to paying strong dividends, but would also keep enough cash on hand to take advantage of possible acquisitions.
The company's strategy seems to be paying off, with Warren Buffett's Berkshire Hathaway recently making a significant investment in GD after selling its stake 10 years ago.
"It's the Warren Buffett seal of approval, which I think counts for a lot," he said. Buffett has not disclosed the size of his holding, he said.
U.S. defense companies are scrambling to cut costs and find alternate revenue sources as they brace for a big decline in spending after a decade of double digit growth.
Many analysts consider GD the best-positioned company in the sector, given the mix of its weapons expertise and red-hot prospects for its Gulfstream business, which already has 200 orders for the new GS650 jet entering service next year. Continued...