UPDATE 1-Raytheon posts higher-than-expected profit, boosts forecast
* Company eyes orders from Middle East
* Earnings per share of $1.51 beat analysts' forecast of $1.33
* Full-year earnings forecast increased by 16 cents a share
WASHINGTON, Oct 24 (Reuters) - U.S. weapons maker Raytheon Co on Thursday reported higher-than-expected quarterly earnings and raised its full-year forecast, and it cited prospects for landing several big foreign orders later this year.
Chief Financial Officer Dave Wasjgras told Reuters he was fairly confident about Raytheon's overall business outlook and that mandatory U.S. military budget cuts required under sequestration were not hitting the defense industry as quickly as initially expected.
He said Raytheon's large international business, which accounts for nearly 40 percent of the company's backlog, was helping to offset the effects of the U.S. budget cuts, and he remained hopeful that U.S. lawmakers would resolve the ongoing fiscal crisis in coming months.
"We exceeded our guidance on sales, earnings and cash flow, and we've taken the year up accordingly with respect to our overall financial guidance," Wasjgras said in a telephone interview. "On a year to date basis, we're seeing a lot of strength versus last year, so we're fairly confident closing out '13 and as we move into 2014."
Wasjgras said Raytheon saw "tremendous opportunities" for international bookings, including some large missile defense orders from the Middle East, in the fourth quarter.
He said Raytheon hoped to land orders to sell a Patriot missile defense system to Kuwait, a ground-based air defense system for Oman and a possible Patriot sale to Qatar, as well as some additional U.S. orders.
Analysts welcomed Raytheon's results, and said they were in line with trends elsewhere in the industry.
Rob Stallard of RBC Capital Markets said he was heartened by the better-than-expected performance of Raytheon's Intelligence, Information and Services (IIS) business, whose operating margin was essentially steady at 13.7 percent.
"This was a strong quarter for Raytheon operationally, especially IIS," he wrote in an analyst note.
Wasjgras said Raytheon was confident that it would prevail in two separate protest actions filed against recent large contract awards it won from the U.S. Navy, given what he described as the company's superior technical solutions.
Raytheon said third-quarter income from continuing operations fell 2.8 percent to $487 million from $501 million a year earlier. Earnings per share were flat at $1.51, while analysts polled by Thomson Reuters I/B/E/S had forecast $1.33.
Sales dropped 3.4 percent to $5.8 billion.
Raytheon said it expected full-year earnings per share of $5.67 to $5.77 from continuing operations, 16 cents more than its previous forecast and up from $5.65 in 2012.
The company increased its 2013 sales forecast by $100 million to a range of $23.6 billion to $23.8 billion. That would amount to drop of 2.5 percent to just over 3 percent from sales of $24.4 billion in 2012.