* Earnings rise 12 pct to $1.49 a share
* Analysts expected $1.28
* U.S. budget cuts seen trimming bookings by up to $600 mln
By Andrea Shalal-Esa
April 25 Raytheon Co raised its profit
forecast for 2013 on Thursday after a stronger-than-expected
jump in first-quarter earnings, the only major arms company to
do so despite fresh U.S. defense budget cuts.
Raytheon, which makes the Patriot missile and a wide array
of other military equipment, also raised its forecast for
full-year cash flow, and its shares climbed 1 percent to $58.72
in morning trading.
Chief Financial Officer David Wajsgras said U.S. bookings
will likely be trimmed by $400 million to $600 million this year
due to mandatory U.S. budget cuts. He said that amount was in
line with Raytheon's expectations and recent talks with the
Pentagon had not resulted in any surprises.
"We have been talking about sequestration for well over a
year. What we see today is not really different from what we had
been expecting," Wajsgras told Reuters in an interview.
Chief Executive William Swanson told analysts that Raytheon
was well prepared to deal with the budget cuts, describing them
as "a speed bump .. that we think we forecasted correctly."
First-quarter earnings from continuing operations rose 8.9
percent to $490 million from $450 million a year earlier, and
earnings per share increased to $1.49 from $1.33. Revenue
slipped to $5.88 billion from $5.93 billion.
Analysts, on average, had expected $1.28 per share on
revenue of $5.69 billion, according to Thomson Reuters I/B/E/S.
The companuy said it now expects full-year earnings of $5.26
to $5.41 per share from continuing operations, up from a
previous forecast of $5.16 to $5.31.
It raised its forecast for full-year cash flow to a range of
$2.1 billion to $2.3 billion, up from $2.0 billion to $2.2
Raytheon revised its revenue target for the full year
downward slightly, to a range of $23.2 billion to $23.7 billion
from $23.6 billion to $24.1 billion.
Swanson said he was confident the company would achieve its
full-year revenue outlook despite U.S. budget cuts.
"If the international comes in stronger, that's even
better," he said, referring to the company's current forecast
for a book-to-bill ratio - orders received to orders shipped -
Wajsgras said Raytheon's first-quarter results exceeded its
expectations, adding that its businesses remained well-aligned
with the U.S. government's priorities in missile defense,
electronic warfare, cyber and intelligence-gathering operations.
"We are confident in our ability to continue to perform
well, even in a more difficult environment," he said.
Defense analyst Rob Stallard of RBC Capital Markets said the
results were much better than expected. "The company continues
to weather the storm in pretty good shape, helped in no small
part by its significant exposure to defense exports," he said.
Bookings were sharply lower in the quarter, but Wajsgras
said they would rise later in the year, when several large
international orders come in.
Raytheon's results were in line with trends seen across the
defense industry this week. The main impact of sequestration -
mandatory across-the-board budget cuts - was expected to be felt
later this year or early in 2014.
Wajsgras said Raytheon, which generates more revenue
overseas than its rivals, continued to see strong international
demand, and foreign bookings were expected to rise 20 percent in
2013, accounting for 36 percent of the company's backlog.
As a result, international sales would rise to about 27
percent to 29 percent of the company's total revenue in 2013.
As seen across the sector, Raytheon's adjusted operating
margin rose 10 basis points to 13.2 percent in the first
Swanson said he recently raised concerns with Deputy Defense
Secretary Ashton Carter that new program "starts" could suffer
in the current budget climate, but said officials were "trying
to protect those programs going forward, which I think bodes
well for the kind of work we do."
Wajsgras told analysts he expected Raytheon to sustain high
operating margins, noting that international orders often
generate higher profit margins.