Lockheed profit up, despite federal budget cuts

by Marjorie Censer, Washington Post
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Bethesda-based Lockheed Martin reported higher profit for its most recent quarter on Tuesday and said automatic government spending cuts are taking less of a toll on the company than it had anticipated.

Earlier this year, the world’s largest defense contractor had said it expected that sequestration — or the automatic cuts — would wipe out $825 million in anticipated annual revenue.

But on Tuesday, Bruce L. Tanner, Lockheed’s chief financial officer, said the forecast has improved and that other military accounts, such as operations and maintenance spending, are taking more of the blow from sequestration..

“We’re seeing less impact … than we had expected to see through the first half of the year,” he said during a call with reporters. “It’s somewhat hard for us to imagine that the full impact will be realized.”

Lockheed reported that quarterly sales hit $11.4 billion, a roughly 4 percent drop from the same three-month period a year earlier. Profits climbed to $859 million ($2.64 per share), up nearly 10 percent from the same quarter the previous year.

But chief executive Marillyn A. Hewson told reporters that government cutbacks will still affect Lockheed.

For instance, she said, the cuts might cause the company to restrict the number of flight tests, and Lockheed expects “continued delays in government contracts.”

In its aeronautics group, the company reported stable sales. While profit declined, Lockheed said it got a boost from its F-35 program, which showed increased production volume. The fighter jet program is Lockheed’s largest and has been the subject of criticism from Pentagon officials. Company officials said Tuesday that they are seeing support for the effort.

Local defense contractors General Dynamics and Northrop Grumman are set to report their earnings Wednesday.