Raytheon has warned that revenues and profits will be lower than expected this year and next, mainly because of problems facing its defence electronics business. Chief executive Dan Burnham says contract delays, competitive pressures and consolidation problems have forced down profit margins.
The company is to record charges of $668 million this year and next, up from an expected $450 million, with $195 million attributable to performance issues on four programme areas at Raytheon Systems - $65 million on excess missile inventory, $25 million on Boeing Business Jet completions and $105 million on two unidentified US Department of Defense contracts now being restructured.
The previously announced restructuring of Raytheon to reduce workforce and facilities accounts for $274 million of the charges.
Revenue for this year is now expected to be $20 billion, $600 million less than originally forecast, and growth for 2000 will be 3% rather than the 6-8% previously predicted, but the company expects sales to rebound in 2001.
Raytheon blames delays in procurement decisions - Egypt and Taiwan, for example, have postponed orders for Patriot missile systems - and a shortage of software engineers.
"We are frustrated with this performance-[but we are] dealing with the problems," Burnham says. The strain of consolidating its recent defence electronics acquisitions helped pushed profit margins below 12%, from the 15% expected. "In retrospect, we tried to do too much too fast, given the size of the task," he says.
Earlier in the month, rival aerospace giant Lockheed Martin announced a restructuring aimed at improving its financial and operational performance (Flight International, 6-12 October).
Source: Flight International