Lockheed Martin Corp. announced yesterday that its first-quarter profit nearly doubled even as sales declined, suggesting that the company's recent cost-cutting campaign is paying off.
The Bethesda-based defense giant built fewer F-16 fighter jets and C-130J transport planes in the first three months of 2001 than it did in the first quarter last year. It also launched fewer rockets and built fewer commercial satellites. Net sales in the past quarter dropped 10 percent to $5 billion.
Still, net income in the quarter rose from $54 million last year, or 14 cents per share, to $105 million in 2001, or 25 cents per share.
"They've been very good at cutting their costs and getting their margins up, and everything seems to be working," said Jeffrey L. Pittsburg, analyst for Pittsburg Research in New York.
The decline in sales also was attributed to the $1.67 billion sale of Lockheed Martin's aerospace electronics division in November to British defense company BAE Systems. That sale was the headliner in a brief spate of divestitures last year designed to calm the fears of investors and reduce the company's then-$12 billion debt.
With its debt down to $9 billion at the start of the year, the company's returns for the quarter were aided by a 13 percent reduction in interest expenses.
Lockheed Martin's stake in the commercial satellite business continued to drag down its performance, as the company recorded a $40 million loss on some contracts. But military and government satellite business improved.
And although the company built fewer F-16 planes than in the past, business servicing and upgrading the jets increased.
The company recorded $5 billion in new orders in the first quarter, including a contract to build the weapons and electronics systems for the next nuclear aircraft carrier. Its F-22 fighter jet also received "bridge" funding to keep open its assembly plant in Marietta, Ga., as Congress and the president ponder the plane's fate.
Company officials expect most of their 2001 sales to be recorded in the second half of the year, as scheduled rocket launches pick up pace and more aircraft are delivered. They estimate that earnings per share will increase 25 percent to 30 percent in 2001 from the base last year of $1.07, and they say sales could reach $24.8 billion.
"The concerns about the operations of this company, I think, are gone," Pittsburg said. "They've done a terrific job."
Shares in Lockheed Martin rose $1.39, or 4 percent, yesterday to close at $35.89 on the New York Stock Exchange. The stock traded 38 percent lower a year ago.