Lockheed Martin reported a better-than-expected 47 per cent jump in quarterly profit on Tuesday and raised its annual profit forecast, helped by strong demand for its missiles and fighter jets, sending its shares up 6 per cent.
The Pentagon’s biggest weapons supplier is the first major defence company to report first-quarter earnings this week, which Wall Street generally expects to be higher than a year ago as the industry benefits from increased US defence spending and global demand for jets and munitions.
Its results sent the whole sector higher, with Northrop Grumman, Raytheon Co and General Dynamics shares all up more than 2 per cent.
Lockheed’s Missiles and Fire Control business, which makes missile defenses like the Terminal High Altitude Area Defense (THAAD), was one of its best-performing units.
On April 1st, the unit was awarded a THAAD interceptor missile contract worth $2.4 billion (€2.1 billion ), some of which are slated to be delivered to Saudi Arabia, which could boost earnings for the current quarter.
Overall, the Bethesda, Maryland-based company said its earnings rose to $1.70 billion, or $5.99 per share, in the first quarter ended March 31st, from $1.16 billion, or $4.02 per share, a year earlier. That was partly helped by a $75 million dollar boost from additional tax deductions on foreign military sales.
Excluding that one-time gain, Lockheed reported $5.73 per share profit, well ahead of the $4.34 per share that Wall Street had expected, on average, according to IBES data from Refinitiv.
Lockheed’s overall net sales for the quarter rose 23 per cent to $14.34 billion. The company’s sales backlog grew to $133.5 billion, up 3 billion over the quarter.
Lockheed shares were up 5.8 per cent at $333.85 in early trading.
Operating margins at the aeronautics division, Lockheed’s biggest, fell to 10.5 per cent in the first quarter from 10.8 per cent a year earlier, but sales were up 27 per cent to $5.5 billion on demand for the F-35 jet and some classified contracts.
The United States is considering expanding sales of Lockheed-made F-35 fighter jets to five new nations including Romania, Greece and Poland as European allies bulk up their defenses in the face of a strengthening Russia, a Pentagon official told Congress in early April.
The F-35, a key programme for Lockheed, suffered a setback earlier this month when a Japanese F-35 stealth fighter crashed in the Pacific Ocean close to northern Japan. The aircraft was less than a year old and was the first F-35 assembled in Japan.
The company highlighted some risks in its earnings report, including US “government actions to prevent the sale or delivery of the corporation’s products” to Turkey.
The US Congress recently introduced several bipartisan resolutions targeting Turkey, calling on President Donald Trump’s administration to impose sanctions or prohibit the transfer of F-35 fighter aircraft.
At issue is Ankara’s unwillingness to reverse a decision to purchase a Russian-made missile defense system, forcing the United States to explore a future for the F-35 programme without Turkey, which makes parts of the fuselage, landing gear and cockpit displays. – Reuters