General Dynamics third-quarter sales fall amid aerospace headwinds, but margins rise

WASHINGTON (Reuters) - Defense contractor General Dynamics Corp GD.N reported an 8.7% fall in third-quarter earnings on Wednesday, sending its shares lower as the coronavirus crisis continues to impact aerospace sales.

FILE PHOTO: A General Dynamics NASSCO ship yard entrance is shown in San Diego, California, U.S., June 17, 2019. REUTERS/Mike Blake

Shares fell 1.1% in morning trading, and had earlier dropped 2.6% before the market opened.

On an earnings conference call with investors , Chief Executive Phebe Novakovic reaffirmed a forecast given a quarter ago of 2020 earnings per share of between $11 and $11.10.

Novakovic said that of 100,000 employees, 1,800 have had COVID-19, with 1,500 of those recovered and back at work.

Profit margins rose to 11.5%, up slightly from the second quarter, as workflow techniques were improved during the pandemic. Margins were still down 1 percentage point from a year ago before the pandemic.

The Gulfstream business jet maker delivered 32 planes to customers, six fewer than a year ago. Pandemic-related lockdowns have hindered jet deliveries since early in the year.

Revenue at the aerospace unit fell 20.8% to $1.95 billion compared with a year ago. Profit margins at the unit also fell to 14.3% from 15.8% in the same period last year.

The marine systems unit, which makes ships and submarines for the U.S. Navy, saw revenue up 7.6% compared with a year earlier. Half that growth comes from the Columbia-class submarine program, Novakovic said on the call with investors.

Earnings per share fell to $287 million, or $2.90 per share, in the third quarter ended Sept. 27, from $291 million, or $3.14 per share, a year earlier.

Analysts’ mean estimate for General Dynamics Corp was for earnings of $2.86 per share, according to Refinitiv IBES data.

General Dynamics’ total order backlog at the end of the third quarter was $81.5 billion, up 21% from the year-ago quarter as the U.S. Department of Defense continues to place orders with U.S. defense contractors.

Revenue at the Reston, Virginia-based company fell 3.4% to $9.4 billion.

Reporting by Mike Stone in Washington, D.C.; Editing by Bernadette Baum and David Holmes