Lockheed Martin Corp. (LMT:US), the world’s largest defense contractor, said third-quarter profit rose 9.3 percent and raised its full-year profit forecast. The company also projected a decline in 2013 sales.
Net income from continuing operations for the quarter rose to $727 million, or $2.21 a share, from $665 million, or $1.99 a share, a year earlier, the company said today in a statement. The average estimate (LMT:US) of 22 analysts surveyed by Bloomberg was for a profit of $1.85 a share. Sales declined 2.1 percent to $11.9 billion.
Full-year profit will be $8.20 to $8.40 a share compared with the forecast of $7.90 to $8.10 a share made in July, the Bethesda, Maryland-based company said. Analysts surveyed by Bloomberg forecast profit of $8.18 a share.
Robert Stevens, 61, the chairman and chief executive officer, has spearheaded an industry effort to stave off U.S. defense budget cuts of $500 billion over a decade under a process called sequestration that would come on top of $487 billion the Pentagon already plans to cut from its proposed budgets over that period.
Lockheed’s 2013 sales will decline “at a low single-digit rate from 2012 levels” because of weak sales anticipated in its Information Systems & Global Solutions unit, and is based “on the assumption that sequestration does not occur,” the company said in the statement today.
Earlier this month Lockheed dropped plans to issue layoff notices to its employees after warning that it may have to fire as many as 10,000 workers if the automatic budget cuts go into effect in January.
The company changed its intention to issue notices after the White House Office of Management and Budget on Sept. 29 said the government will cover legal and compensation costs if defense and domestic cuts take effect in January and contractors are held liable in court for not giving enough notice under the federal Worker Adjustment and Retraining Notification Act.
Lockheed decided not to issue layoff notices after the Pentagon reassured the company that no contract disruptions would occur on January 2 or for several months after as a result of sequestration, Stevens told reporters today on a conference call.
“We will comply with the law and issue WARN Act notices at the appropriate time” if sequestration-related actions are likely to affect the company’s contracts, Stevens said.
Stevens has said he plans to retire as CEO in January to be replaced by Chris Kubasik, 51, currently the president and chief operating officer.
Lockheed fell less than 1 percent to $91.95 yesterday in New York trading and has gained 13.7 percent this year.
Lockheed is under pressure as it negotiates a contract with the Pentagon for the next lot of its F-35 Joint Strike Fighter, the Pentagon’s single biggest weapons program. Officials including Air Force Major General Christopher Bogdan, the deputy program executive officer, have criticized the company for poor relations, delays in software development and problems with helmets worn by the plane’s pilots.
The company has received 75 percent of the funds toward that fifth lot of F-35 trail production orders, pending completion of contract talks, Bruce Tanner, Lockheed’s chief financial officer, told reporters today.
Lockheed has 94 F-35 jets on its production line from various lots, and the lack of a completed contract for the fifth lot won’t affect this year’s profit, Tanner said.
Initial production orders of F-35 jets during the quarter valued at about $300 million partially offset lower sales volumes from C-130 transports and F-16 fighters in the Aeronautics unit, Lockheed said in the statement.
The unit’s sales fell 6.7 percent to $3.7 billion, and profit fell 6.5 percent to $415 million.
Sales at the Electronic Systems unit, which makes anti- missile systems and oversees the Navy’s Littoral Combat Ship program, rose 4.2 percent to $3.82 billion because of Aegis radar and tactical missiles. Profit increased 13.9 percent to $509 million, the company said.
Space Systems sales fell 4.9 percent to $2.06 billion because of fewer commercial satellite deliveries, Lockheed said. Unit profit rose 19.9 percent to $301 million.
Sales at the Information Systems & Global Solutions unit fell 1.3 percent to $2.3 billion. Profit at the unit, which provides information-technology services to U.S. agencies including the Pentagon, fell 1.9 percent to $209 million.
Lockheed’s discontinued operations included the Pacific Architects & Engineers unit that was sold in April 2011 and Savi Technology Inc.
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