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U.S. DEFENSE MAJORS CONTINUE STRONG GROWTH

The Urgent Operational Requirements (UORs) of the U.S. Armed Forces for the fulfilment of its requirements to fight the Iraq war has bolstered profits of all the U.S. major defense companies, with only General Dynamic’s shipbuilding segment demonstrating some concern in a fall in margins, in contrast to those reported by Northrop.

27 Oct 04. Northrop Grumman Corp.’s third-quarter earnings rose 51 percent due to strength from its mission systems, integrated systems and ships and space technology segments.

Third-quarter earnings increased to $278m, or 76 cents a share, (2003: $184m, or 50 cents a share). Income from continuing operations for the latest quarter was $291m, or 80 cents a share, which beat analysts’ average forecast of 77 cents a share. In the year-ago period, income from continuing operations was $200m, or 54 cents a share. Third-quarter sales increased 11 percent to $7.4bn from $6.7bn, topping Wall Street projections of $7.25bn.

Northrop reclassified its component-technologies business as a continuing operation, abandoning an effort to sell the unit and putting it back on the company’s books after classifying the business as a discontinued operation in the third quarter of 2002. The company’s ships business continued to be a source of strength, with sales rising 14 percent. Information technology revenue rose 8 percent, while mission-systems sales rose 21 percent. Pension expenses declined to $87m from $143m last year. The company also said it expects full-year 2004 sales in excess of $29bn versus previous guidance of approximately $29bn. In fiscal 2003, the company had sales of $26.21bn. The company now expects 2004 per-share earnings from continuing operations of $2.95 to $3.00 versus previous guidance of $2.90 to $3.00. In fiscal 2003, Northrop Grumman reported income from continuing operations of $2.16 a share on a post-split basis. For 2005, Northrop expects sales of approximately $31 billion.

20 Oct 04. General Dynamics (NYSE: GD – News) reported $4.8bn in revenues for the third quarter of 2004, (2003: 4.4bn).

Net earnings were $322m in the quarter, or $1.60 per share on a fully diluted basis, (2003: $262m, or $1.32). Net cash provided by operating activities was $309m for the quarter. Free cash flow from operations, defined as net cash provided by operating activities less capital expenditures, was $249m. Funded backlog at the end of the third quarter was $25.3bn, and total backlog was $40.3bn, (2004 2nd qtr.: $26.4bn and $41.1bn).

“General Dynamics generated strong results for the quarter in both absolute and relative terms,” said Nicholas D. Chabraja, General Dynamics chairman and chief executive officer. “Operating earnings increased over the year-ago period in all of our segments. Further, our operating earnings rate improved this quarter as it has in each of the last four quarters. In the Aerospace group, earnings more than doubled over the third quarter of 2003, based on improving market conditions, continuing cost improvement and tighter control of pre-owned activity. Combat Systems improved margins on a modest increase in revenue, and the Information Systems and Technology group continued to generate positive returns. Compared to the same period last year, Marine Systems also improved. However, the group’s margin rate declined relative to earlier quarters this year as a result of cost growth in our commercial tanker program during the period,” Chabraja said. “Our backlog — both funded and unfunded — remained strong, and net cash continues to approximate net earnings,” Chabraja said.

27 Oct 04. Boeing Co. (NYSE:BA – News) posted a 78 percent jump in quarterly earnings that beat Wall Street forecasts as stronger demand for its military networking and weapons systems helped offset a decline in commercial airplane revenue.

The company raised its full-year forecast and bumped its commercial plane delivery forecast for 2005 higher. The airplane m

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