21 Apr 04. General Dynamics (NYSE: GD – News) reported 2004 first quarter revenues of $4.8bn, as compared with 2003 first quarter revenues of $3.4bn. Net earnings in the 2004 first quarter were $269m, or $1.34 per share on a fully diluted basis, compared with 2003 first quarter net earnings of $221m, or $1.11 per share fully diluted. Net cash provided by operating activities was $329m for the quarter. Free cash flow from operations, defined as net cash provided by operating activities less capital expenditures, was $276 million.

General Dynamics said profit margins improved at it Gulfstream business jet unit and warship group. Revenues jumped 41 percent to $4.8bn, from $3.4bn in the year-ago period.

Total backlog, a closely watched measure of unfilled orders, was $41.6bn, compared with $30.5bn a year earlier. The company raised its outlook for 2004 earnings per share to the range of $5.70 to $5.75, citing “the strength of this quarter’s performance.” Analysts had expected the company to earn $5.58 per share, on average for 2004.

Comment: The strong results reported by GD and Honeywell indicate that not only are companies benefiting from increased defense spending but that the civil sector is picking up. Armed with war chests expect GD and others to continue a spending spree on European key defence assets at a time when Europe is still to get its own act together