Lockheed's earnings double in 1Q

Profit per share rises to 49 cents, from 25 cents in 2001

April 24, 2002|By Robert Little | Robert Little,SUN STAFF

Lockheed Martin Corp. announced yesterday that profit doubled in the first quarter because of increased sales of jet fighters, cargo planes and commercial rockets - the same products that once threatened to drain off the company's earnings.

Payments for deliveries of five F-16 fighters and two C-130J transport planes, along with three commercial rocket launches and a new contract for the F-22 fighter, propelled Lockheed Martin's first-quarter earnings to $218 million, or 49 cents per share. The company posted adjusted earnings of $105 million, or 25 cents per share, during the first quarter of 2001.

Lockheed Martin officials attributed the strong quarter largely to the timing of contract awards, and said they expect sales to decline slightly in the second quarter for the same reason. They did not change their outlook for the full year, predicting increased annual sales of 5 percent to 7 percent.

But growth in the company's aerospace and space systems divisions quieted any suggestion that those two businesses might be troubling ones for the Bethesda defense contractor.

"Some of it's timing, but even allowing for that they're very solid across the board," said Joseph Nadol, an analyst for J.P. Morgan in New York. "This company is the premier defense stock in the industry right now."

As recently as a year ago, declines in military spending and uncertainty surrounding the F-22 and C-130 led some analysts to suggest that Lockheed Martin might eventually quit the aircraft business. The commercial space business had similar critics.

Since then, the company has won the right to build the Pentagon's new F-35 fighter, a contract that could be worth $200 billion or more, and has met with increasing success launching rockets and winning new aircraft contracts. Sales in the aeronautics division rose 56 percent in the first quarter to $1.3 billion; sales in the space division rose 32 percent to $1.8 billion.

Net sales for the first three months of 2002 were $6 billion, a 26 percent increase over last year's first-quarter sales of $4.7 billion.

"I don't think the growth is finished," said Nadol, who maintains a "buy" rating on Lockheed stock. "The company certainly has had some problems in the past, but it's been the best performer in the industry for a year or two, and I think a lot of the recovery is yet to come."

Shares of Lockheed Martin rose $3.08, or more than 5 percent, yesterday to close at $62.20 on the New York Stock Exchange. The company's stock has risen more than 70 percent in the last year.

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