Lockheed Martin earnings rose 15% in 4th quarter $310.7 million profit made as revenues fell

January 24, 1996|By Ted Shelsby | Ted Shelsby,SUN STAFF

Lockheed Martin Corp., which surprised analysts earlier this month with its $9.1 billion blockbuster deal to acquire Loral Corp., surprised them again yesterday by reporting higher-than-expected fourth-quarter earnings.

Net income for the most recent three months was up 15 percent, despite an 8.4 percent drop in revenues.

The world's largest defense and aerospace company earned $310.7 million in the quarter, or $1.38 a share, on sales of $6.05 billion. This compares with a profit of $270 million, or $1.23 a share, and revenues of $6.6 billion in the same period a year ago.

"There were no big surprises," said Paul H. Nisbit, president of JSA Research in Newport, R.I., "but their numbers were a little better than we expected. We had them at $1.36 a share. They beat us by a couple of cents."

Operating profits were equal to $1.56 a share. This was about 10 cents higher than analysts had expected. Based on the estimates of 10 analysts surveyed by Zacks Investment Research, profits from continuing operations were expected to be $1.46 per share.

Net income for the year fell 33 percent to $682 million from $1.02 billion. On a per-share basis, this was equal to $3.05, down from $4.66 the previous year.

Net income was reduced by a one-time charge of $690 million, taken in the first and second quarters, to cover fees related to the merger of Lockheed Corp. and Martin Martin Corp.

Operating profits, which exclude the charge, rose 17 percent to $1.12 billion.

Charles P. Manor, a spokesman for the company, attributed the drop in fourth-quarter sales to the transition between mature programs and new ones. In the electronics sector, he said, there were fewer deliveries of the Aegis combat system, used to protect Navy ships from attack by torpedoes, sea-skimming missiles and aircraft.

The Aeronautics Group, he said, had fewer deliveries of F-16 fighter jets and C-130 cargo planes. This business, Mr. Manor said, will be replaced in the near future by the development of the new F-22 fighter plane and the upgraded C-130-J cargo plane.

Mr. Manor said cost-cutting programs initiated by the two companies before their merger has helped boost earnings even as sales declined.

Norman R. Augustine, Lockheed Martin's president and chief executive, said the company has "made tangible progress toward realizing the significant cost savings anticipated" in the merger.

Lockheed Martin reached an agreement two weeks ago to acquire the bulk of Loral, a New York-based defense electronics company. The move will create a company with sales of about $30 billion a year, a business backlog approaching $50 billion and more than 200,000 employees.

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