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Slower US Army orders weigh on General Dynamics combat systems

Wednesday, 23 Oct 2013 | 9:53 AM ET

WASHINGTON, Oct 23 (Reuters) - U.S. Army orders have slowed more than expected given uncertainty about the U.S. budget outlook as well as the end of U.S. wars in Afghanistan and Iraq, weighing on sales in General Dynamics Corp's combat division, the company's chief executive told analysts on Wednesday.

Chief Executive Phebe Novakovic said furloughs and the government shutdown had further exacerbated the situation and were clearly putting pressure on the Army's ability to sign contracts with industry. "If you combine all of those, it's put a fair amount of compression on our sales estimate," she said.

Revenue in the combat systems division fell 30 percent to $1.3 billion in the third quarter, but Novakovic said revenue would be significantly higher in the fourth quarter, largely due to international sales. For the full year, the division's revenue should be around 20 percent lower than in 2012, although margins should be higher, she said.

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