NEW YORK Aerospace and defense companies Raytheon Co (RTN.N), L-3 Communications (LLL.N) and Goodrich GR.N reported higher profits and forecast strong performance next year as the sector promises to hold up relatively well against the onslaught of the credit crisis and global economic downturn.
The results, which helped push their shares sharply higher, come after strong numbers from Lockheed Martin Corp (LMT.N) and Northrop Grumman Corp (NOC.N) earlier this week, marred only by rising pension liabilities after an abysmal few months in global investment markets.
"With the underlying defense business still doing well for most industry participants, pension is probably the biggest risk facing the defense industry," said Macquarie Research analyst Robert Stallard.
Lockheed Martin and Boeing Co (BA.N), the Pentagon's two largest suppliers, both warned of drops of more than 20 percent in their pension funds this year due to market turmoil, which will likely mean higher pension costs next year.
Raytheon, the U.S. No. 5 defense contractor, managed to sidestep that issue, forecasting a gain from its pension accounting next year, but the full position of its funds will not be established until the end of the year.
RAYTHEON BEATS FORECAST, UPS VIEW
The company, which makes Patriot missile systems and a range of military and civilian electronics, reported a 43 percent increase in quarterly net profit to $427 million, or $1.01 per share.
That beat Wall Street's forecast of 97 cents per share, according to Reuters Estimates.
Seeing no immediate threats to the defense industry, it announced a $2 billion stock buyback plan, raised its full-year outlook and forecast 2009 profit in line with analysts' estimates.
It now expects 2008 profit of $3.95 to $4.00 per share, up from its last estimate of $3.80 to $3.95. That is still slightly below analysts' average estimate of $4.01 per share.
For 2009, it forecast earnings of $4.45 to $4.60 per share, in line with analysts' average estimate of $4.46 per share.
Its shares rose 4.3 percent to $46.04 on the New York Stock Exchange.
GOODRICH, L-3 GAIN
Goodrich and L-3 also reported profit gains, but Goodrich -- one of the world's leading makers of aircraft brakes and landing gear -- notched down its revenue forecast for the full year, largely because of an ongoing strike at Boeing.
Goodrich reported a 32 percent increase in third-quarter profit to $168 million, or $1.33 per share, beating analysts' average forecast of $1.13 per share.
The company, which makes parts for Boeing, EADS EAD.PA unit Airbus and military plane makers, forecast full-year earnings from continuing operations broadly below Wall Street estimates, and cut its revenue forecast slightly, largely because of the Boeing strike.
The strike has shut down Boeing's plants since September 6, restricting deliveries from some suppliers. Goodrich based its forecast on the strike ending later this month or early November.
Goodrich forecast full-year earnings from continuing operations in a range of $4.84 to $4.94 per share, below analysts' average forecast of $4.94 per share.
For next year, it predicted a soft economy and no real growth in airline flights, but still forecast earnings of $5.05 to $5.25 per share, in line with analysts' average forecast of $5.21 per share.
Goodrich shares rose 2.9 percent to $32.97 on the NYSE.
L-3 Communications, the U.S. No. 7 defense contractor, reported net profit of $1.73 per share, beating Wall Street's average forecast of $1.71 per share.
For the full year, it held its forecast for earnings, excluding one-time items, at greater than or equal to $6.75 per share. That is below analysts' average estimate of $6.83.
L-3 shares rose 2 percent to $81.47 on the NYSE.
(Editing by Brian Moss)