UPDATE 2-Raytheon quarterly revenue rises 8 pct on improved demand

(Adds details from results, tax reform impact)

Jan 25 (Reuters) - Tomahawk missile maker Raytheon Co reported an 8 percent increase in fourth-quarter revenue on Thursday, benefiting from demand for more weapons from United States and its allies.

A lower effective tax rate in 2018 prompted the U.S. defense contractor to forecast full-year earnings per share from continuing operations in the range of $9.55 to $9.75, much higher than the average analyst estimate of $8.87.

"We are really pleased with the results we announced here for closing out '17, and certainly the guidance that we gave for '18," Chief Financial Officer Toby O'Brien told Reuters in an interview as the company reported a record $25.3 billion in sales for the year. The weapons maker said its 2018 net sales would increase 4 to 6 percent to a range of $26.4 billion-$26.9 billion, against Wall Street analysts' expectation of $26.63 billion, according to Thomson Reuters I/B/E/S.

The company expects 2018 operating cash flow from continuing operations to be between $3.6 billion and $4.0 billion, compared with $2.7 billion in 2017.

Because of a $1 billion pretax discretionary pension plan contribution at the end of 2017, cash flow projections for 2018 increased by about half a billion dollars, O'Brien said.

Companies were expected to front-load pension contributions by taking advantage of higher 2017 deduction rates, before tax rates fall in 2018.

Lockheed Martin Co's CFO, during a third-quarter conference call with analysts, said his company was contemplating such a move. Lockheed will announce results on Monday.

Raytheon and other U.S. weapons makers are expected to benefit in the coming year from an increase in overall defense spending under President Donald Trump's administration.

O'Brien said that 40 percent of Raytheon's order backlog was from non-U.S. customers, helping the company diversify its sources of revenue. O'Brien said recent changes to the U.S. tax code were already making Raytheon "more globally competitive."

Sales at Raytheon's missile systems unit, its biggest by revenue, grew 15.2 percent to about $2.19 billion in the quarter ended Dec. 31, as it sold more medium-range air-to-air missiles, Paveway laser-guided bombs and SM-3 anti-ballistic missiles.

Sales in space and airborne systems, its second-biggest by revenue, rose 4.4 percent to $1.67 billion, with more airborne radars sold.

The unit makes electronic warfare systems for tactical aircraft, helicopters and ships, as well as tracking and navigation sensors used on airborne platforms.

Raytheon's overall sales rose to $6.78 billion in the quarter, from $6.28 billion a year earlier, narrowly missing analyst estimates for $6.81 billion.

However, income from continuing operations attributable to Raytheon fell to $393 million, or $1.35 per share, from $555 million, or $1.87 per share, a year earlier.

Besides the front-loaded pension contributions, Raytheon had another unanticipated U.S. tax reform-related charge in the fourth-quarter, including $171 million that was not included in the company's prior forecast. (Reporting by Mike Stone in Washington and Ankit Ajmera in Bengaluru; Editing by Frances Kerry and Bernadette Baum)