Lockheed Martin Corp., the No. 1 U.S. defense contractor, posted a 41 percent jump in quarterly profit Tuesday, beating Wall Street forecasts, as demand climbed for its combat aircraft and information technology services.
The company also raised its sales and earnings forecasts for 2004 and 2005.
“They came forward with a solid quarter and I liked their outlook,” said Wendell Perkins, a fund manager who holds shares of Lockheed at Johnson Asset Management. “I’m pleased with cash production, operating improvements, and the sales figures were solid.”
The Bethesda, Maryland-based company, whose PAC-3 missiles and C-130 Hercules transport planes are in use in the war in Iraq, said third-quarter earnings rose to $307 million, or 69 cents per share, from $217 million, or 48 cents per share, a year earlier.
Analysts’ average forecast was 65 cents per share, according to Reuters Estimates. Last year’s results included a charge of 18 cents a share for debt retirement.
Lockheed, which also makes the F-16 fighter plane as well as commercial and government satellites, said revenue rose 4 percent to $8.44 billion, driven mostly by government spending on technology that helps computers share and compile data for uses such as national border monitoring.
Analysts’ average revenue forecast was $8.58 billion.
Four of Lockheed’s five business units posted higher profit margins.
“We’ve increased guidance for the remainder of this year and next year, and we’re projecting improved margins,” said Chief Financial Officer Chris Kubasik. “That’s the main driver.”
The company now expects 2004 earnings of $2.65 to $2.75 per share and 2005 earnings of $3 to $3.25 per share. Wall Street was looking for $2.68 and $3.28, respectively.
The company’s 2004 and 2005 sales forecasts were lower than Wall Street estimates. Kubasik attributed this to difficulty in predicting exactly when a product will be be delivered and counted in sales. Deliveries and launches of equipment such as planes and satellites can be “lumpy,” he said.
Lockheed forecast 2004 sales of $34.4 billion to $34.8 billion, and 2005 sales of $34.5 billion to $36 billion. Analysts’ average forecasts are $34.72 billion and $36.28 billion, respectively.