Lockheed Q1 profit beats view; budget cuts dampen sales outlook
* Q1 net $761 mln vs $660 mln expected by analysts
* Full year revenues seen at low end of January guidance
* Cash from operations totalled $2.1 bln
WASHINGTON, April 23 (Reuters) - Lockheed Martin Corp , the Pentagon's biggest weapons supplier, reported a better-than-expected 14.8 percent increase in net income for the first quarter but warned annual revenues were likely to come in at the low end of earlier guidance due to U.S. budget cuts.
It is the first of the big U.S. weapons makers to report first-quarter earnings. Analysts have forecast lower sales and earnings across the sector as U.S. military spending declines after more than a decade of sharp growth.
Lockheed, which builds F-35 fighter jets, Aegis missiles and new coastal warships, said revenues for the full year would be at the low end of the $44.5 billion to $46 billion range forecast in January, with the additional budget cuts seen reducing net sales by about $825 million.
But it maintained its guidance for full-year operating profit and earnings per share.
Helped by a lower tax expenses, first-quarter net profit rose to $761 million, or $2.33 per diluted share, compared to $668 million, or $2.03 a share, a year earlier. Revenues dropped 2 percent to $11.1 billion from $11.3 billion in the year-earlier period.
Analysts polled by Thomson Reuters I/B/E/S had expected a first-quarter profit of $660 million and earnings per share of just $2.04. They had forecast revenues of $10.3 billion.
"While the impact on our business has been limited to date, we continue to work closely with our customers to better understand the future impact sequestration may have on our programs," Lockheed Chief Executive Marillyn Hewson said in a statement.
Lockheed and other arms makers are trying to maintain earnings by cutting overhead and pumping up weapons sales to other countries. Many are also looking for opportunities in other markets outside the defense sector.
Lockheed said its first-quarter earnings were reduced by a non-cash pension adjustment of $121 million, and a special charge of $30 million related to workforce reductions at the company's information systems and global solutions business.
Those items were partially offset by lower income tax expenses given a retroactive reinstatement of a federal research and development tax credit, the company said.
Lockheed said its cash from operations was $2.1 billion, a huge jump from just $458 million in the year-earlier quarter. Lockheed repurchased 5.1 million shares for $461 million in the first quarter, compared to 2.7 million shares for $242 million a year earlier.
The company's revenues rose at three of five business sectors, while earnings dropped at three of the five.
Sales in the biggest division, aeronautics, dropped 14 percent mainly due to lower F-16 deliveries, while sales in the missiles and fire control division rose 13 percent.