Lockheed earnings dip 6% for quarter Divestitures cut sales

profit per share rises


July 22, 1998|By Greg Schneider | Greg Schneider,SUN STAFF

Lockheed Martin Corp.'s earnings continue to feel the effect of recent divestitures, dropping slightly overall for the second quarter but rising on a per-share basis, the company said yesterday.

Net earnings for the big Bethesda-based defense company totaled $289 million for the period that ended June 30, down 6 percent from $308 million in the second quarter of last year.

The 1998 figure translated to $1.52 per fully diluted share, which was higher than the $1.42 per share in the second quarter of 1997 because the company has fewer shares outstanding.

The company sold several business units last year, including its historic airplane parts plant in Middle River, which was traded to General Electric Co. as part of a deal that allowed Lockheed Martin to retire the equivalent of 29 million shares of common stock.

Lockheed Martin's $6.5 billion in sales for the second quarter was down 5 percent from the prior year's $6.9 billion. Adjusted for the divestitures, sales this year grew 3 percent for the quarter, the company said.

"Second-quarter results are on track with our expectations," Chairman and Chief Executive Officer Vance D. Coffman said in a statement.

"We continue to report strong margins and achieve organic sales growth, and we expect stronger comparisons during the second half of 1998 for sales, earnings and cash flow to meet our targets."

Experts generally agreed, and Lockheed Martin's per-share earnings exceeded the $1.50 consensus reported by the First Call Corp. survey of industry analysts.

"The numbers were pretty much in line with what we had expected," said Roger Threlfall of J. P. Morgan Securities. "I classify the earnings as typical first-half-of-the-year earnings for a defense company."

Threlfall pointed out that military contract deliveries tend to fall toward the end of the calendar year and said he expects the company's performance to pick up.

Lockheed Martin, whose numerous programs include the F-16 and F-22 fighter planes, the C-130 transport plane, Titan rocket boosters and the troubled THAAD anti-ballistic missile for the Army, saw its backlog of business orders shrink during the second quarter to $44.2 billion from $47.1 billion at the end of last year.

The company announced last week that in the face of government opposition, it had given up its attempt to buy Northrop Grumman Corp. for $11 billion.

Coffman said yesterday that Lockheed Martin will maintain its "strategy of leveraging our core strengths to raise performance and growth in traditional defense and civil government businesses, while carefully and selectively pursuing higher-growth businesses such as commercial space and information services to build value."

Shares of Lockheed Martin gained $62.5 cents in trading yesterday to close at $106.9375.

Pub Date: 7/22/98

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