Lockheed Martin profit up, lowers outlook

NEW YORK (Reuters) - Lockheed Martin Corp (LMT.N), the world's No. 1 defense contractor, reported a better-than-expected 3 percent increase in quarterly profit on Thursday, but sharply cut its full-year forecast due to higher expected pension costs.

Many established companies such as Lockheed Martin are facing headaches this year from their big pension funds, which were decimated by losses in the financial markets in the second half of last year.

The maker of F-22 and F-35 fighter jets, and a range of electronic systems for military and civilian use, reported fourth-quarter profit of $823 million, or $2.05 per share, compared with $799 million, or $1.89 per share, in the year earlier quarter.

That beat Wall Street's average forecast of $1.91 per share, according to Reuters Estimates.

It cut its full-year earnings forecast to a range of $7.05 to $7.25 per share from its last forecast in October of $7.65 to $7.90 per share. Analysts were expecting $7.85 per share, on average.

The company said the cut was largely due to an expected $470 million in pension accounting adjustments, as it reduced the discount rate used to calculate its pension liabilities, as opposed to its last forecast for only $60 million in such costs.

(Reporting by Bill Rigby; Editing by Derek Caney)