(Reuters) - Raytheon Co (RTN.N), the maker of Patriot missile systems, reported higher-than-expected quarterly revenue as sales of its Paveway smart bombs increased.
The Waltham, Massachusetts-based company’s shares rose 2.4 percent to $138.60 in premarket trading on Thursday.
Raytheon also raised its 2016 forecast for earnings from continuing operations, partly due to a lower tax rate and fall in interest expenses.
The company benefited from a big backlog from previous years, mainly in missile systems and space and airborne systems, Chief Financial Officer Toby O’Brien told Reuters.
Sales in Raytheon’s missile systems unit, its biggest business, increased 6 percent in the second quarter.
The business, which makes laser- and GPS-guided smart bombs, accounted for more than a quarter of the company’s total revenue.
Sales rose 9.3 percent in the space and airborne systems business, which makes tracking, targeting and navigation sensors for aircraft, drones and missiles, helped by higher revenue from classified programs.
O’Brien said Raytheon got nearly a third of its sales from clients outside the United States. Of this, about half came from the Middle East and Africa regions.
He said weak oil prices did not hurt the company’s business in the Middle East. “Our customers in that region are spending from a defense point of view on high priority areas that protect both their sovereignty and their citizens,” O’Brien said.
Raytheon raised its full-year earnings forecast to $7.13-$7.33 per share from $6.93-$7.13, leaving its net sales forecast unchanged at $24 billion-$24.5 billion.
Analysts on average were expecting earnings of $7.18 per share and revenue of $24.42 billion, according to Thomson Reuters I/B/E/S.
Raytheon could win a contract by late 2017 from the Polish government, if Poland and the United States reach an agreement on the Patriot missile defense system by the end of this year, O’Brien said.
This month, Poland’s defense minister said the country had made significant progress in its talks with Raytheon over a $5-billion missile defense system.
Net income attributable to Raytheon rose 40.4 percent to $709 million, or $2.38 per share, in the quarter ended July 3, including a gain related to the restructuring of its ThalesRaytheonSystems joint venture and a tax benefit.
Total revenue rose 3.2 percent to $6.04 billion, comfortably beating the average analyst estimate of $5.83 billion.
Raytheon’s backlog stood at $35.31 billion at the end of the quarter compared with $34.77 billion at the end of the first quarter.
Reporting by Idrees Ali in Washington and Ankit Ajmera in Bengaluru; Editing by Anil D'Silva and Kirti Pandey