Lockheed Martin, Northrop Post Higher Profits
Lockheed Martin and Northrop Grumman, two of the world's biggest defense contractors, reported higher fourth-quarter profits Thursday on the back of strong military and civil electronics sales.
The two companies, which are the Pentagon's No. 1 and No. 3 suppliers respectively, both forecast growth in profit for the full year, as U.S. defense spending shows no sign of slipping in President George W. Bush's last year in office.
The results match higher profits posted by No. 4 U.S. defense contractor General Dynamics on Wednesday.
Boeing, the U.S. No 2 military supplier, is set to report earnings next week.
Shares of Lockheed , which easily beat Wall Street profit forecasts, rose about 1 percent in early trading on the New York Stock Exchange. Northrop, which hit Wall Street's average estimate, saw its shares dip 2 percent.
Lockheed, which is the world's largest defense contractor, reported a greater-than expected 10 percent rise in quarterly profit to $799 million, or $1.89 per share. That exceeded Wall Street's average forecast of $1.70 per share, according to Reuters Estimates.
The Bethesda, Maryland-based company reported lower quarterly revenue from its F-16 fighter jet, which is now made only for overseas military forces, and also from its new F-35 fighter, which is still in the early stages of production.
But those declines were offset by higher revenue at its electronics, information and space systems units, helped by sales of its technology services for military and civil use.
Overall sales were flat at $10.8 billion.
Citing improvements in its aeronautics business, Lockheed raised its full-year earnings forecast to a range of $7.05 to $7.25 per share, up from its previous forecast of $6.95 to $7.15 per share. Analysts are expecting $7.29 per share, on average.
Northrop Profit Edges Up
Northrop, known for its B-2 bomber, Global Hawk unmanned aircraft and a range of warships and submarines, reported slightly higher fourth-quarter profit and forecast full-year profit in line with Wall Street estimates.
The Los Angeles-based company reported quarterly net profit of $454 million, or $1.31 per share, up just $1 million from the year-ago quarter. Earnings from continuing operations were $1.32 per share, matching Wall Street forecasts.
"We have about 20 or 30 thousand programs under way, but certainly our shipbuilding business has made a significant improvement over last year," Northrop Chairman and Chief Executive Dr. Ronald Sugar told CNBC. "As you recall, we have had the impacts of the Hurricane Katrina devastation for a couple of years. We're rebuilding those shipyards. Since that storm, we've delivered six warships to the United States Navy. Our aircraft business is doing well. Our information technology business and our electronics, so, I'm very pleased; it's been a very balanced performance across the board."
Sales were up 10 percent to $8.8 billion overall, ahead of analysts' average forecast of $8.4 billion.
But the increase in profit was only slight due to a $111 million one-time gain in the year-ago quarter from selling shares of car parts maker TRW Automotive Holdings, which Northrop spun off several years ago.
For the whole year, Northrop forecast earnings from continuing operations of $5.50 to $5.75 per share, in line with Wall Street's average estimate of $5.62 per share.
Lockheed shares were trading up 67 cents at $102.71, while Northrop's were down $1.73 at $76.40, both on the NYSE.
CNBC.com contributed to this article.