Lockheed Martin beats street expectations with strong Q3 results
24 October 2007US defence major Lockheed Martin beat Wall Street expectations Tuesday with strong results across its four business units that pushed third quarter earnings up 22 per cent. The Bethesda, Maryland-based defence contractor also boosted its outlook for 2007.
The company reported earnings of $766 million, or $1.80 per share, up from the $629 million, or $1.46 per share it posted in the same period last year. Revenue came in at $11.1 billion, a 16 per cent jump over the 2006 third quarter result of $9.6 billion. The company held to its previous revenue estimate of between $41 billion and $41.75 billion for the year.
The company notched up its 2007 outlook by five cents, saying it expects to earn between $6.70 and $6.85. For 2008, Lockheed forecasts earnings between $6.95 and $7.15 per share. Analysts are more bullish, predicting $6.87 per share earnings for 2007 on revenue of $41.69 billion. For 2008, earnings are forecast at $7.23 per share.
Lockheed Chief Financial Officer, Bruce Tanner, said Lockheed expects a downturn in its aeronautics unit as long running fighter programmes like the F-16 are phased out and the new JSF F-35 jet slowly ramps up. Fourth quarter aeronautics results could be down $500 million from the third quarter and $1 billion lower in 2008. This has been a long-standing Lockheed projection, though few analysts have paid any heed to it.
For the coming year, though Lockheed and other military contractors have benefited from the massive spikes in defence spending because of the wars in Afghanistan and Iraq over the previous years, some analysts feel that this may now be a thing of the past. As the US steps into an election year, the budget debates for Pentagon are likely to get more intense.
Meanwhile, all of Lockheed''s four business segments reported increases in sales for the third quarter. Aeronautics posted a 16 per cent increase in sales, to $3.34 billion, on the back of higher sales in fighter jets and the C-130J transport plane programmes.
Electronic Systems, which makes missiles and other warfare equipment, was up 10 per cent to $2.83 billion. Information systems and global services revenue rose 24 per cent to $2.7 billion, while the Space business was up 19 per cent to $2.2 billion.
For the first three quarters of 2007, Lockheed earned $2.2 billion, or $5.21 per share, on revenue of $31 billion.