* Per-share profit $2.33 vs Street view $2.04
* Full-year revenue now seen at low end of January guidance
* Sees federal spending cuts hitting Q2, Q3 results
By Andrea Shalal-Esa
WASHINGTON, April 23 Lockheed Martin Corp
, the Pentagon's biggest weapons supplier, reported a
better-than-expected 14.8 percent rise in per-share earnings on
Tuesday but warned full-year revenue was likely to come in at
the low end of earlier guidance due to U.S. budget cuts.
Lockheed 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 revenue 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.
The company stood by its previous guidance for full-year
operating profit and earnings per share, citing
stronger-than-expected results in all five of its business
sectors in the first quarter.
The upbeat report boosted Lockheed shares to a new year high
of $99.48, but shares had slipped back to around $96.80 in early
afternoon. Analyst Joe Nadol at JP Morgan said Lockheed's
results were likely better than those of other arms makers which
are due to report results later this week.
Helped by a lower tax expenses, first-quarter net profit
rose to $761 million, or $2.33 per share, from $668 million, or
$2.03 a share, a year earlier. Revenue dropped 2 percent to
Analysts polled by Thomson Reuters I/B/E/S had expected
earnings of $2.04 per share on revenue of $10.3 billion.
Sales in its biggest division, aeronautics, dropped 14
percent, mainly due to lower deliveries of F-16 fighter jets,
while sales in the missiles and fire control division rose 13
"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, referring to across-the-board federal spending cuts.
Hewson told reporters she still expects sequestration to
have a "significant" impact going forward.
Chief Financial Officer Bruce Tanner told reporters he
expected the mandatory spending cuts to have a greater impact on
Lockheed's results in the second and third quarters of 2013.
"Sequestration hasn't really hit thus far," he said. "We
expect those impacts to grow over the next three quarters, with
the second and third quarters having larger reductions as the
government's full-year fiscal 2013 cuts are realized over the
next six months."
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 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 its
information systems and global solutions business.
Those items were partially offset by lower income tax
expenses thanks to a retroactive reinstatement of a federal
research and development tax credit, the company said.
Lockheed said cash from operations was $2.1 billion in the
quarter, a huge jump from just $458 million a year earlier.
The company repurchased 5.1 million shares for $461 million
in the first quarter, compared with 2.7 million shares for $242
million a year earlier.
Tanner told reporters Lockheed was making progress in
improving a troubled cost-tracking system for its aeronautics
division that has resulted in repeated withholdings of payments.
He said the Pentagon's Defense Contracts Managements Agency had
approved a new plan for the "earned value management system" and
Lockheed hoped to implement it before the end of the year.