Graham Warwick / Washington dc
Aerospace earnings buck economic trend for now as increased defence sales boosted results for second quarter
Lockheed Martin has raised its earnings and cashflow projections for the year after increased defence sales boosted its second quarter. Revenues for the quarter slipped 4% to $6 billion, but net earnings almost tripled to $114 million as the world's number two aerospace company continued its financial recovery.
Raytheon, Northrop Grumman and General Dynamics also reported results broadly showing higher defence sales and improved income in line with Boeing's strong showing in its Military Aircraft and Missiles results released in late July.
After adjustments for acquisitions and divestitures, revenue at Lockheed Martin's Systems Integration sector increased 5% to $2.17 billion as a result of higher sales in air defence and missile systems. Fewer F-16 and C-130J deliveries pushed Aeronautics sector sales down 16%, and revenues at Space Systems slipped slightly on lower launch vehicle and commercial satellite sales.
Lockheed Martin is to streamline its Commercial Space Systems unit to reduce costs, relocating satellite design, programme management and other functions from Sunny-vale, California, to Newtown, Pennsylvania, where the communications payloads are made. Final assembly of the A2100 commercial satellite will remain in Sunnyvale.
Raytheon revenues rose 4.4% to $4.31 billion in the second quarter as sales in its Electronic Systems segment soared 14%, and by 10% in its Command, Control, Communications & Information Technology division. Operating income rose 23% to $117 million, but the company posted a net loss of $67 million because of lingering costs associated with the discontinued Engineers &Constructors business.
Revenues at Raytheon Aircraft fell 5% on slower sales of business and commuter aircraft, and by 17% at Aircraft Integration Systems as aircraft completion and modification programmes wound down with no new contracts secured to replace them.
Northrop Grumman's second quarter results reflected the recently completed merger with Litton Industries. Revenues almost doubled to $3.66 billion, but net earnings fell 36% as a result of lower pension income. The Litton acquisition and higher avionics sales boosted revenues at the company's Electronic Sensors &Systems sector by almost 90% to $1.24 billion. Sales at Logicon soared 140% as result of Litton and other recent additions.
General Dynamics saw second quarter revenues and earnings grow, to $2.96 billion and $227 million respectively, on higher defence sales and its acquisition of ammunition maker Primex. Revenues in its Aerospace sector slipped almost 7% through lower business jet sales at Gulfstream.
The slowing world economy has yet to seriously impact on the leading aerospace concerns. Boeing results for the quarter released last week showed overall revenues up 4% over last year to almost $15.4 billion with net earnings up 35% at $840 million. With the exception of Honeywell, aerospace equipment suppliers have also turned in strong second quarter results.
Source: Flight International
