Warplane contracts boost Lockheed profit

Net income rises 15% to $250 million, or 55 cents per share

April 23, 2003|By BLOOMBERG NEWS

Lockheed Martin Corp. said yesterday that its first-quarter earnings rose 15 percent because revenue poured in from contracts to develop new warplanes.

The Bethesda-based defense contractor said its net income rose to $250 million, or 55 cents a share, from $218 million, or 49 cents, in last year's first quarter. Sales jumped 18 percent to $7.05 billion, Lockheed said.

Lockheed's revenue was generated mainly from development of the F/A-22 and F-35 Joint Strike Fighter jet programs. The company's warplanes are winning orders and helping Lockheed turn the corner after combined losses of $1.57 billion in 2000 and 2001. A $4.1 billion contract for 60 C-130J transport planes awarded to Lockheed last month will add to profit next year.

"The development work for the Joint Strike Fighter and F/A-22 is where a lot of this growth is coming from," said Frank Giove, senior equity analyst at Trusco Capital Management, which holds 2.7 million Lockheed shares among its $40 billion under management. "This is a very fat quarter. They exceeded expectations big time."

Analysts had estimated that revenue would increase by 10 percent. Aeronautics sales rose 57 percent from fighter programs such as the F-16 and development work on the F/A-22 and F-35 fighters. Profit jumped 58 percent to $145 million.

Lockheed's backlog increased by about $5 billion to $74.6 billion in the quarter, said spokesman Tom Jurkowsky.

Shares of Lockheed rose $3.30, or 7.3 percent, to $48.55 on the New York Stock Exchange.

Lockheed increased its estimate for profit in 2003, excluding a loss on telecommunications businesses up for sale, to $2.20 to $2.30 a share from $2.15 to $2.20 because its pension expense won't be as large as anticipated.

The government will pay more of the pension costs, cutting the company's expense to $305 million this year from $330 million originally forecast. The company can recover pension costs under government contracts.

The forecast also reflects expectations for a decline in interest expense, to $510 million from $535 million because of early debt repayment. Shares outstanding will drop to 455 million from 460 million.

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