By Andrea Shalal-Esa
Oct 24 Lockheed Martin Corp, the largest
U.S. weapons maker, on Wednesday posted an 11 percent increase
in third-quarter earnings, beating expectations by a wide
margin, and raised its full-year forecast.
Lockheed, which builds the next-generation F-35 fighter jet,
warned that revenue would ease slightly in 2013, pulled lower by
a mid-single-digit decline in sales at its information systems
and global solutions business.
It raised its 2012 earnings forecast to a range of $8.20 to
$8.40 from a range of $7.90 to $8.10.
Lockheed shares rose 1.5 percent to $93.36 in early trading.
It said business segment operating profit would remain above
11 percent of revenues next year, with aggressive cost-cutting
to continue across the company, which also builds Aegis
missiles, satellites and new coastal warships.
Net earnings per share rose 11 percent to $2.21 in the third
quarter from $1.99 in the year-earlier period, but they fell
from $2.38 in the second quarter.
Analysts surveyed by Thomson Reuters I/B/E/S expected
third-quarter earnings per share of $1.85 on revenue of $11.17
Revenue dropped 2 percent to $11.87 billion in the quarter,
from $12.1 billion in the third quarter of 2011.
Chris Kubasik, who will take over as chief executive next
year, told reporters that 25 percent of orders in the quarter
came from international customers. That bolstered his confidence
that Lockheed would reach its goal of boosting foreign sales to
20 percent of total revenues in two years.
Lockheed, which receives more than 80 percent of its revenue
from the U.S. government, said its preliminary 2013 forecast
assumed that Congress and the White House would avert $500
billion in additional, across-the-board defense cuts that are
due to start taking effect in January.
If the cuts take effect, the company said they would have a
material effect on its results.
Chief Executive Bob Stevens, who has been outspoken in his
opposition to the indiscriminate nature of the cuts, said he
expected Congress to address the additional defense budget cuts
- which would come on top of $487 billion in cuts already on the
books - when it returned after the November elections.
CASH FROM OPERATIONS JUMPS
Stevens, who retires at the end of the year, said Lockheed
still planned to warn workers about possible layoffs linked to
the budget cuts once it received guidance from the government.
At the same time, he said Lockheed continued to cut costs
from operations wherever possible, and will keep trying to get
"There is more cost that we can take out of this business,
working in conjunction with our customers," Stevens told
Lockheed said cash from operations during the quarter
reached $1.6 billion, compared with $551 million after pension
contributions of $960 million during the third quarter of 2011.
Kubasik said Lockheed was making "good progress" on its
biggest program, the F-35 fighter, and close to a "reasonable
resolution" of its long-delayed talks with the Pentagon about a
fifth batch of production planes.
He said the company was about 50 percent done with work on
the planes under a preliminary contract.
Chief Financial Officer Bruce Tanner said failure to reach
an agreement before the end of the year would not have much
impact on 2012 results, since the company's work on the planes
was already 75 percent funded.