General Dynamics Corp. (GD:US), the Pentagon’s No. 3 contractor, raised its full-year profit forecast while second-quarter sales declined in a slumping defense market.
Net income from continuing operations rose 1 percent to $646 million, or $1.88 a share, from $640 million, or $1.81 a share, a year earlier, the company said in a statement today. That beat the average estimate (GD:US) of 21 analysts (GD:US) surveyed by Bloomberg was $1.77.
The contractor increased its profit outlook for the year to $7.40 to $7.45 a share from April’s forecast of $7.05 to $7.10 a share.
General Dynamics and other defense suppliers are fighting for a shrinking pool of federal contracts as the U.S. withdraws combat troops from Afghanistan and reduces spending under a process known as sequestration.
Sales fell 4.6 percent to $7.47 billion in the quarter, trailing the average estimate of $7.53 billion, according to 17 analysts surveyed by Bloomberg.
Revenue in the company’s aerospace unit, which includes the Gulfstream business jet, declined 2.8 percent to $2 billion. The other three divisions of the Falls Church, Virginia-based company are marine systems, combat systems and information systems and technology.
General Dynamics rose 1.8 percent to close at $120.73 in New York. The shares have jumped 44 percent in the past 12 months, compared with a 17 percent gain in the Standard & Poor’s 500 Index. (SPX)
Phebe Novakovic, chairman and chief executive officer, said in a statement that “robust order activity across the portfolio of Gulfstream business jets” and an increased backlog of defense orders provided “a solid building block for the future.”
Net income from continuing operations in the quarter didn’t include a one-time $105 million charge for the sale of a business in the combat systems division.
Lockheed Martin Corp. (LMT:US), the largest U.S. government contractor, yesterday reported sales and profit beating analysts’ estimates for the quarter. The company, based in Bethesda, Maryland, also boosted its full-year profit outlook.
To contact the reporter on this story: Jonathan D. Salant in Washington at firstname.lastname@example.org
To contact the editors responsible for this story: Stephanie Stoughton at email@example.com Larry Liebert