Lockheed Martin Corp, the Pentagon’s No 1 weapons supplier, reported a 17% rise in quarterly profit yesterday, driven by increased production of its F-35 fighter jets.
The company sharpened its outlook for 2018 net sales to $53bn, slightly above the average analyst estimate of $52.6bn, according to Refinitiv data.
Lockheed predicted 2019 sales would increase by 5% to 6% from 2018 as the company assumes “key programs” like the F-35 fighter jet, designed to avoid detection, will continue to be funded by the US government.
The 2019 sales outlook would put sales within a range of $55.6bn to $56.2bn, slightly ahead of the average Wall Street estimate of $55.4bn.
Net income rose to $1.47bn, or $5.14 per share, in the third quarter, from $963mn, or $3.32 per share, a year earlier. Net sales rose to $14.31bn from $12.34bn a year earlier.
Analysts expected adjusted profit of $4.31 per share on revenue of $13.07bn, according to Refinitiv estimates. Lockheed’s EPS was $5.14.
Chief executive officer Marillyn Hewson described it as “another quarter of strong growth leading us to improve our expectations for our full-year financial results.”
The Bethesda, Maryland-based company said its order backlog increased to $109bn at the end of the quarter from $105bn three months ago.
Lockheed shares fell nearly 1% to $323.76 as the broader market tumbled.


McDonald’s 
McDonald’s, home of the Big Mac, reported a dip in third-quarter profit yesterday, but notched comparable sales growth in key regions, including Britain, France and Japan.
Net income at the fast-food giant fell to $1.6bn, a drop of 13.1% from the same period of the prior year. But the 2017 quarter was boosted by about $850mn from the sale of businesses in China and Hong Kong.
Quarterly revenues fell 6.7% to $5.4bn.
But on the bright side, comparable sales – a key benchmark in the restaurant business – grew in all four of McDonald’s regional categories, with the home US market up 2.4%.
The company also experienced strong sales growth in Britain, Australia, France, Italy, the Netherlands and Japan, McDonald’s said.
The results come on the heels of improvements in comparable sales over the last three years following efforts at simplifying the menu to speed service and upgrading mobile applications to meet consumer demand.
The company also has invested in food delivery.
“We have made substantial progress modernising restaurants around the world, enhancing hospitality and elevating the experience for the millions of customers we serve every day,” said McDonald’s chief executive Steve Easterbrook.
Shares jumped 2.6% to $170.95 in pre-market trading.


CCB 
China Construction Bank Corp (CCB), the country’s second-biggest lender by assets, reported a 6.6% rise in third-quarter net profit yesterday, as its bad loan ratio dipped and interest margins stabilised.
CCB is the first of China’s so-called Big Five state-controlled lenders to report third-quarter earnings and its financial results bode well for the others. Chinese banks have seen stabilising margins and increased lending this year, helped by the central bank’s successive reductions in bank reserve requirement ratios.
Net profit rose to 67.08bn yuan ($9.7bn) in the three months to September 30 from 62.9bn yuan a year earlier, the bank said.
That was slightly below the forecast of three analysts surveyed by Reuters for a 6.9% increase.
Beijing has been pumping funds into the banking system, rolling out support measures for local businesses and seeking to boost confidence in the falling Chinese stock market as the outlook for the world’s second-biggest economy has been threatened by the escalating Sino-US trade war.
But some analysts worry that unrestrained, credit-fuelled growth could worsen a build-up in bad loans in the longer term, undermining Beijing’s push to reduce riskier lending and a mountain of debt.
On its part, CCB has accelerated bad loan disposals and heeded Beijing’s call to conduct debt-to-equity swaps to lower corporate leverage and fend off systemic financial risks, leading to a slower build-up of NPLs at the bank.
CCB’s non-performing loan (NPL) ratio dropped slightly to 1.47% at the end of the quarter, from 1.48% at the end of June.
Its net interest margin, a key measure of profitability, stood at 2.34% at the end of September, unchanged from three months earlier. 
Verizon 
Verizon Communications Inc yesterday said its net income rose to $4.92bn, or $1.19 per share, in the quarter ended September 30, up from $3.62bn, or 89 cents per share, a year earlier.
Excluding some items, Verizon earned $1.22 per share, beating analysts’ average estimate of $1.19 per share, according to Refinitiv data.
Verizon, which has been focused on cost-cutting, said it is on track to reach $10bn in cumulative cash savings by 2021.
Verizon launched home 5G internet service on October 1 in parts of Houston, Indianapolis, Los Angeles and Sacramento. The next-generation wireless network is expected to bring faster data speeds, which Verizon hopes will help it compete with competitors like cable company Comcast Corp.
It has, so far, concentrated on investing in its wireless network rather than deal-making. Its next-largest competitor AT&T Inc bought Time Warner in an $85bn deal that closed in June, betting it could attract more customers with media content.
Verizon said it lost 63,000 Fios video subscribers during the quarter, more than the 18,000 it lost last year, as viewers continue to favour cheaper TV services delivered over the internet, over paying for pricier cable packages.
It added 54,000 Fios internet customers, fewer than the 66,000 Verizon added a year earlier. Total operating revenue rose 2.8% to $32.61bn during the quarter, beating analysts’ average estimate of $32.51bn, according to Refinitiv data.


Harley-Davidson
Harley-Davidson Inc reported its biggest quarterly profit beat in two years yesterday and the motorcycle maker maintained its 2018 shipments forecast, as sales for its classic heavy touring bikes climbed overseas led by Europe. The 115-year old Milwaukee-based company said its net income rose to $113.86mn, or 68 cents per share in the third quarter, from $68.21mn, or 40 cents per share, a year earlier. Excluding manufacturing optimisation costs, the company earned 78 cents a share. Revenue from motorcycles and related products rose 16.8% to $1.12bn.
Analysts on average expected a profit of 53 cents a share and revenue of $1.07bn, according to data from Refinitiv.
The company maintained its full-year shipments forecast range of between 231,000 and 236,000 motorcycles and said it expects motorcycle segment operating margin to be in the range of between 9% and 10%.
The company’s demographic challenges in the domestic market are well documented – core customers are growing older and outreach efforts to attract new and young riders have yet to show results.
In addition, President Donald Trump’s call to boycott the motorcycle manufacturer for its decision to move production for European markets overseas has only compounded the company’s troubles.
Shares of the company were up 1% in trading before the bell. Rising costs and a tit-for-tat tariff war with China have weighed on the shares of most US manufacturers. Harley’s shares are down about 30 percent so far this year and have underperformed the broader S&P 500 index.
Analysts at Goldman Sachs last week cut the 12-month price target for the stock to $45 from $47. Similarly, brokerage BMO Capital markets last Friday downgraded the company’s shares, citing frustration with its performance.
The company still dominates the local heavyweight motorcycle market, but rivals such as Polaris are chipping away at its market share. To counter weak demand at home, Harley has plans to make deeper inroads into some of the fastest growing two-wheeler markets in Asia through lightweight motorcycles.
But much of the strategy’s success in a highly cost-competitive market like India will hinge upon the price of the new bikes. While Harley has declined to disclose a price range, it has said that the lightweight bikes will be a premium product.
Retail sales in the United States, which accounts for more than half of the company’s sales, fell 13.3% in the three months ended September 30 from a year ago. Analysts expect 2018 to be the third straight year of declining sales. International retail sales, however, rose 2.6%. In Europe, retail sales rose 3%.


Caterpillar
Caterpillar Inc reported yesterday an adjusted profit of $2.86 a share, up from $1.95 a share, last year. Analysts on average had expected $2.85 a share. Net profit for the quarter through September came in at $2.88 per share, compared with $1.77 last year.
The Deerfield, Illinois-based company has boosted the full-year profit outlook twice this year, betting on a global economy that is poised to record its strongest growth since 2011.
However, China’s economic growth has slowed to its weakest pace since the global financial crisis and the International Monetary fund cut the global economic growth forecasts for 2018 and 2019, so investors have turned cautious.
Caterpillar shares are down about 25% since late January amid deepening US-China trade tensions and soaring raw material and freight costs for local manufacturers. Shares of other major industrials, including 3M Co, are also in “bear market” territory, down 20% or more from their highs.
In probably a sign of softening demand, the order backlog at the end of the third quarter was about $400mn lower than the previous quarter, with decreases across the three primary segments.
Caterpillar also acknowledged an increase in manufacturing costs in the latest quarter due to elevated freight costs, and higher steel prices and import tariffs. The company said tariffs will cost it about $40mn in the latest quarter. However, for the full-year, it now expects the impact to be at the low end of the previously provided range of $100mn to $200mn.
To offset the rising input cost, it will increase the prices of its machines and engines in the range of 1 to 4% globally from January 2019.


PulteGroup 
PulteGroup Inc topped Wall Street estimates for profit yesterday, as the homebuilder was able to sell more homes at higher prices in a housing market that it admitted is slowing in the face of rising interest rates.
Shares of the homebuilder, however, fell 1.8% before the bell as orders in the third quarter came below expectations.
The housing market, which has been a weak spot in an otherwise robust economy, has been hobbled by a short supply of homes and higher prices, dampening affordability for potential buyers. Rising mortgage rates that outpace the rate of wage growth have also added to the concerns of homebuyers.
“The critical underpinnings that have supported a slow but steady housing recovery...remain solidly in place,” chief executive Ryan Marshall, said, adding that buyer concerns around affordability and rising mortgage rates appear to have impacted near-term market dynamics.
Pulte, which mainly sells single-family homes, said the average home price rose to $427,000 from $399,000 a year earlier, while the number of homes sold rose to 6,031 from 5,151.
Orders, an indication of future revenue for homebuilders, rose marginally to 5,350 homes, below estimates of 5,512 homes, according to Refinitiv data.
Pulte’s net income rose 63% to $289.5mn, or $1.01 per share, in the third quarter ended September 30, from $177.5mn, or 58 cents per share, a year earlier.
Revenue rose 24.3% to $2.65bn.


Wartsila 
Finnish ship technology and power plant maker Wartsila reported lower than expected quarterly profit and orders yesterday and downgraded the demand outlook for its services division, sending its shares down 9%.
Services account for almost half of the company’s revenue and Wartsila service orders from the marine sector have been slow to pick up as the global shipbuilding industry recovers from a lengthy downturn.
In addition, Wartsila said its power plant business was hit by postponed investment decisions by clients uncertain about the global environment due to ongoing trade disputes.
“We had expected somewhat more activity in the merchant and oil and gas (ship) segments... The global situation, the uncertainty, may have had its impact,” Wartsila chief executive Jaakko Eskola told Reuters by telephone, citing trade disputes without giving specific details. Total third-quarter adjusted operating profit rose 8% from a year ago to €141mn ($162mn) but missed analysts’ average estimate of €152mn. New orders were up 1 percent at €1.37bn, compared to a market forecast of €1.50bn. Shares in the company were down 9% at €12.90 by 0915 GMT, among the worst performers on the euro STOXX 600 index .


Dyson 
British electric appliance pioneer Dyson said yesterday that 2017 operating profit surged by almost one third to around £800mn, aided by fast growth in China, India, Japan, Korea and Taiwan. Revenues leapt 40% to £3.5bn. The firm had picked Singapore as the site for its first electric car plant as part of a £2.5bn (€2.8bn, $3.3bn) global investment drive in new technology.


UTC 
United Technologies Corp reported a better-than-expected quarterly profit and raised its full-year profit forecast yesterday as it benefited from higher sales of aircraft parts, driven by record production at planemakers Boeing and Airbus.
A boom in air travel on the back of an improving global economy has boosted profits at major suppliers United Tech and Honeywell.
United Tech said sales in its Pratt & Whitney aircraft engines business jumped about 24% to $4.79bn in the third quarter ended September 30.
Revenue at the company’s aerospace systems unit, which provides spare parts, overhaul and repair services to airlines, increased 8.7% to $3.96bn.
The maker of Carrier air conditioners and Otis elevators also raised its 2018 adjusted profit forecast for the third time to a range of $7.20 and $7.30, up from $7.10 and $7.25, previously.
Related Story