Lockheed reports better-than-expected quarterly results

Lockheed Martin Corp, the Pentagon’s No 1 weapons supplier, reported better-than-expected quarterly results on higher demand for its F-35 fighter jets, and said it expects full-year revenue at the higher end of its forecast. Revenue at Lockheed’s aeronautics division increased about 11% to $3.92bn in the third quarter, with $500mn coming from additional sales of the F-35 fighter jet, it said yesterday. Lockheed is developing and building F-35 jets for the US military and nine other countries. With estimated development and procurement costs of $391bn for the US alone, the F-35 is the world’s most expensive weapons programme. Lockheed did not address the timing of its planned purchase of Sikorsky Aircraft, but United Technologies Corp, which owns Sikorsky, expects to close the deal in the fourth quarter. Excluding the Sikorsky deal and a strategic review aimed at selling or spinning off its services businesses, Lockheed said 2016 sales should be comparable with 2015. Total operating margin should range from 11.0% to 11.5%, down from the expected margin of about 12% in 2015, it said. The company sees 2015 sales of $45bn, and segment operating profit of $5.4bn. It had forecast sales of $43.5bn to $45bn, with segment operating profit of $5.225bn to $5.375bn. Lockheed also forecast earnings per share of $11.30 in 2015, the high end of its earlier forecast of $11to $11.30. Analysts, on average, looked for 2015 sales of $44.82bn, according to Thomson Reuters I/B/E/S. Lockheed said it had $2.4bn in potential cost and termination liability exposure, given its decision to self-fund work on C-130J transport planes and F-35 jets for the US government while contracts are being negotiated. For the quarter ended September 27, total net sales rose to $11.46bn from $11.11bn a year earlier. Net income fell to $865mn, or $2.77 per share, from $888mn, or $2.76 per share, a year earlier. Analysts, on average, expected profit of $2.72 per share on revenue of $11.14bn.