April 29, 2009 / 1:21 PM / 10 years ago

UPDATE 2-General Dynamics profit tops estimates

 * Q1 EPS cont ops $1.54 vs. estimate $1.46
 * Shares up 6 pct  (Adds CEO comment on outlook)
 ATLANTA, April 29 (Reuters) - General Dynamics Corp (GD.N) reported higher-than-expected results on Wednesday as improved earnings in its defense businesses helped offset weakness in aerospace, sending its shares up about 6 percent.
 The maker of submarines, ships and business jets had net earnings of $590 million, or $1.53 a share, for the first quarter, up 3 percent from $572 million, or $1.43 a share, a year earlier.
 Excluding discontinued operations, profit was $1.54 a share, compared with $1.46 a share expected by analysts, according to Reuters Estimates.
 Revenue rose 18 percent to $8.3 billion, better than the $7.83 billion expected by analysts.
 The aerospace segment posted a revenue rise of 14 percent, aided by the acquisition of Jet Aviation in late 2008. But operating profit in the segment fell 15 percent.
 “While we expect its defense divisions to remain robust going forward, aerospace faces particular headwinds due to the slump in business jet demand,” Macquarie Research analyst Rob Stallard said in a note to clients.
 During a conference call, Chief Executive Nicholas Chabraja cited improved flying hours for the company’s Gulfstream jet unit and rising customer interest in new jet orders in recent months.
 The CEO said performance of the aerospace business would be as good or better in the second quarter compared with the first quarter. But the third quarter could be weaker for the unit because of expected furloughs and fewer aircraft deliveries, he added.
 “While conditions are by no means good, I am pleased to report that they have improved materially from what we experienced in February,” he said.
 The combat, marine and information systems and technology segments posted increases in quarterly sales and operating profit.
 Chabraja also said General Dynamics was not backing off a previous forecast calling for full-year earnings of $6 to $6.10 a share. Analysts currently expect profit of $6.06 a share for the year, according to Reuters Estimates.
 Shares of General Dynamics were up $3.05, or 6 percent, at $53.66 in afternoon New York Stock Exchange trading.  (Reporting by Karen Jacobs, editing by Gerald E. McCormick and Matthew Lewis)       

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