DEFENSE SPENDING BOOSTS U.S. DEFENSE MAJORS PROFITS
29 Apr 04. A Pentagon spending spree on new defense technology boosted profits at defense companies Boeing, Lockheed Martin, Raytheon Co., Rockwell Collins, EDO, Goodrich and Moog Inc. (See NEWS IN BRIEF)
The military’s rush to replace supplies used in the war in Iraq also added to Raytheon sales after the company supplied Tomahawk and Patriot missile systems for the conflict.
“The administration has been pushing to make up for the atrophying of arms inventory during the 1990s,” said Paul Nisbet, an analyst with independent research firm JSA Research, adding that the Department of Defense’s funding for homeland security also spurred spending.”
“The economy is going up and when the economy goes up, the level of passenger and cargo traffic goes up,” he said.
On April 28 Boeing Co. rode an 18 percent surge in revenue from its defense contracting unit to a far-better-than-expected $623m profit in the first quarter and raised its earnings estimates for 2004 and 2005. The impressive showing reflects continued strength in Boeing’s military business and the strongest signs yet of an emerging recovery in the slumping commercial-airplane industry.
Net income reported Wednesday amounted to 77 cents a share, compared with a net loss of $478 million, or 60 cents a share, for the first quarter of 2003.
The company’s per-share earnings, which got a 12-cent boost from interest from a federal tax refund, shattered Wall Street’s estimates as Boeing had indicated would be the case in a brief statement last week. Analysts surveyed by Thomson First Call had pegged earnings at 44 cents per share. Revenues were $12.96 billion, up 6 percent from $12.26 billion in the same period a year earlier.
The defense and space unit accounted for 57 percent of revenue, or $7.4 billion, led by a 13 percent jump in sales of military aircraft and weapon systems.
Lockheed announced its results on April 27th, where a surge in fighter aircraft revenue propelled the company’s first-quarter profits 16 per cent higher, and helped lift the US defence contractor’s sales and profit expectations for the year.
The boost came from the largest military programme ever – the $200bn-plus contract to build the F-35 JSF. Lockheed also had a large increase in F- 16 deliveries to international customers in the quarter. First-quarter net profit rose to $291m, or 65 cents per share, from $250m, or 55 cents, in the period a year ago. Sales rose 18 per cent to $8.3bn, from $7.1bn in the quarter last year.
Lockheed raised its full-year earnings outlook to $2.50-$2.60 per share, including pension costs and other items, from $2.40-$2.50. The new estimate represents 6-11 per cent earnings growth this year. The world’s largest defence group estimates sales at $33.8bn-$34.8bn, up from its previous range of $33.5bn-$34.5bn. It sees cash from operations at $2.4bn, compared with guidance of a bout $2bn. Chris Kubasik, Lockheed chief financial officer, said the improvement in aircraft sales and profits this year would come mostly from JSF, and some from F-22.
On April 27th Rockwell Collins, Inc. (NYSE:COL – News) reported earnings per share of 39 cents for the second quarter of fiscal year 2004 ended March 31, 2004, an increase of 6 cents or 18% from the 33 cents reported for the same period last year. Net income increased 20% to $71m, (2003: $59m).
Sales for the second quarter of fiscal year 2004 were $719m, an increase of $101m, or 16%, (2003: $618m).
“Another quarter of increased aftermarket sales volume in our Commercial Systems business is a sign that the recovery in the commercial airline and business jet markets is beginning to take hold,” said Rockwell Collins Chairman, President and Chief Executive Officer Clay Jones. “This improvement, combined with the continued strong performance of our Government Systems business and ent