* Raises 2014 profit forecast to $10.85-$11.15/share
* Q2 earnings $2.76/share vs $2.64 a year earlier
* Records pension income of $85 mln
(Adds revised 2014 profit forecast, share price)
July 22 Lockheed Martin Corp, the
Pentagon's largest defense supplier, reported a 3.5 percent rise
in quarterly profit on Tuesday and raised its full-year earnings
forecast, sending its shares up more than 2 percent.
Analysts cited a strong profit margin performance, while
sales fell 1 percent but still topped expectations.
The company said it was optimistic that an investigation
into the engine failure that grounded its F-35 fighter jet for
nearly a month would finish soon. U.S. military officials last
week approved limited flights of the F-35 following its
grounding after the failure of a Pratt & Whitney engine
on a U.S. Air Force model at a Florida air base on June 23.
Lockheed said higher interest rates lowered its pension
liability in the second quarter, ended June 29. The defense
contractor has amended some of its pension plans for non-union
employees to freeze future retirement benefits and will instead
transition them to a contribution retirement savings plan.
The company said it recorded pension income of $85 million
for the second quarter, compared with an expense of $120 million
a year earlier.
Lockheed also said it expects to resume share repurchases in
the current quarter. The company had ceased buybacks while it
was considering amendments to its benefit pension plans.
Net income rose to $889 million, or $2.76 a share, from $859
million, or $2.64 a share, a year earlier. Analysts had expected
$2.66 a share, on average, according to Thomson Reuters I/B/E/S.
Total revenue fell about 1 percent to $11.31 billion, hurt
by a decline in U.S. government spending. Analysts had expected
sales of $11.1 billion.
Lockheed reported a 13 percent rise in revenue at its
aeronautics business - its largest unit - due to a larger number
of production contracts for the F-35 fighter jet and an increase
in C-130 plane deliveries. With an estimated cost of $400
billion, the radar-evading F-35 is the world's most expensive
Sales also rose slightly in the company's mission systems
and training segment, but fell in the information systems and
global solutions division, the missiles and fire control
division and space systems.
Lockheed, which also makes satellites and coastal warships,
raised its 2014 earnings forecast to $10.85-$11.15 a share from
Lockheed's shares have gained about 41 percent in the past
year, compared with a 16 percent rise in the S&P 500 index
. They were up 2.7 percent at $167.41 in afternoon trading
(Reporting by Sagarika Jaisinghani in Bangalore and Karen
Jacobs in Atlanta; Editing by Maju Samuel, Saumyadeb Chakrabarty
and Peter Galloway)