ATLANTA (Reuters) - Defense contractor Northrop Grumman Corp (NOC.N) reported a higher-than-expected quarterly profit aided by lower pension expenses and better performance at most of its divisions.
The supplier of unmanned spy planes and communications and intelligence work is moving to improve operations and lower costs as the U.S. Defense Department, its main customer, looks to reduce overhead and make weapons programs more affordable.
Northrop Grumman plans to sell off or spin off its shipmaking business, a division that has been a drag on results in the past.
“Fourth quarter results were stronger than anticipated with robust profit margins,” RBC Capital Markets analyst Robert Stallard said in a note to clients.
For the fourth quarter, improvement was noted in many segments especially shipbuilding, which had a quarterly sales gain of 4 percent while segment income rose 52 percent.
Segment income rose 11 percent in aerospace, 66 percent in information systems and 23 percent in technical services.
Pension expenses came to $1 million in the current quarter, down from $87 million a year earlier.
Fourth-quarter net earnings of $376 million, or $1.27 a share compared with $413 million, or $1.31 a share, a year earlier.
Earnings from continuing operations also were $1.27 a share against $1.19 a share a year earlier. Analysts expected profit of $1.01 a share, according to Thomson Reuters I/B/E/S.
Sales fell 3 percent to $8.6 billion from $8.9 billion, and the company cited fewer working days in the latest quarter.
The company forecast 2011 profit from continuing operations of $6.40 to $6.60 a share, compared with $6.77 a diluted share for 2010.
Northrop said its 2011 forecast excluded results from shipbuilding. Sales of $27.5 billion are seen for this year, compared with $34.8 billion for 2010.
Shares of Northrop Grumman were off 10 cents, or 0.1 percent, at $70.99 in morning trading.
Reporting by Karen Jacobs, editing by Dave Zimmerman