U.S. weapons maker Raytheon Co (RTN.N) on Thursday reported higher-than-expected earnings and revenue for the second quarter and joined other major defense companies in raising its forecast for the full year despite Pentagon budget cuts.
The company saw some delays in U.S. bookings as a result of new budget cuts imposed on the Pentagon in March, but it is "staying ahead of the curve" with continued cost-cutting and strong international sales, Chief Financial Officer David Wajsgras told Reuters.
"Looking ahead, the company will continue to stay in front of the environment and continue to be proactive in the way that we're managing the company," he said. "It's a challenging environment, but I feel good about the position Raytheon has and how we're going to operate going forward."
The company, which makes Patriot missiles and a wide array of other military equipment, said it now expects earnings per share of $5.51 to $5.61 from continuing operations this year, up from an earlier forecast of $5.26 to $5.41.
It raised its full-year revenue forecast to a range of $23.5 billion to $23.7 billion, up from $23.2 billion to $23.7 billion.
Second-quarter earnings per share rose to $1.50 from $1.41 a year earlier, while net income attributable to the company increased to $488 million from $471 million.
Revenue, which fell in the first quarter, climbed 2.1 percent to $6.12 billion.
Analysts polled by Thomson Reuters I/B/E/S had expected earnings per share of $1.30 on revenue of $5.8 billion.
Raytheon said the increase in earnings per share was mainly due to operational improvements and capital deployment actions. The company bought back 3.4 million shares of its common stock for $225 million in the second quarter. It said it had repurchased 7.6 million shares for $450 so far this year.
The company's integrated defense and missile systems businesses reported higher revenue and earnings in the latest quarter, but sales and profits were lower in both the intelligence, information and services sector, and the space and airborne systems unit.
Raytheon's results were largely in line with those reported earlier this week by Lockheed Martin Corp (LMT.N), Northrop Grumman Corp (NOC.N) and other big weapons makers.
Also in line with its peers, Raytheon reported a drop in its backlog, to $32.4 billion from $33.9 billion a year earlier.
Raytheon's operating margin increased by 0.1 percentage point, to 12.5 percent, in the second quarter, and Wajsgras said it should remain strong going forward.
Asked about the outlook for 2014, he said Raytheon should be able to maintain good profit margins, despite the challenging U.S. budget environment, through cost-cutting and international sales, which account for 30 percent of the company's business.
International sales rose 10 percent in the second quarter, and several large overseas orders are expected in the second half, he said. Raytheon also expects some sizeable U.S. orders, he said.
Wajsgras said Raytheon still expects the additional budget cuts in fiscal 2013 imposed under "sequestration" to trim $500 million from bookings for the full year, and about $400 million from revenue in the second half.
The company is pressing ahead to improve its operations and trim overhead, he said. A recent consolidation is ahead of schedule and is expected to yield savings well in excess of the initial target of $85 million, he said.
(Reporting by Andrea Shalal-Esa; Editing by Gerald E. McCormick and John Wallace)