Northrop's profit rose 59% in 3rd quarter

Improved margins at Linthicum unit help boost results

October 30, 2003|By BLOOMBERG NEWS

LOS ANGELES - Northrop Grumman Corp., the world's largest builder of warships, reported yesterday that its third-quarter profit climbed 59 percent as its acquisition of TRW Inc. boosted sales for military satellites and missile defense.

Profit from continuing operations rose to $224 million, or $1.21 a share, from $141 million, or $1.17, a year earlier, the company said in a regulatory filing. Sales increased 57 percent to $6.62 billion from $4.21 billion.

The two units acquired, Mission Systems and Space Technology, contributed $1.76 billion of sales and $119 million of profit. The purchase of TRW in December made Northrop one of the largest providers of sensors used on military satellites and gave it a bigger share of the U.S. missile-defense program.

Northrop expects sales this year of $25.5 billion to $26 billion and boosted its profit forecast to $4.20 to $4.30 a share, from $4 to $4.25.

Northrop's shares rose $2.88, or 3.3 percent, to $90.38 on the New York Stock Exchange yesterday.

Northrop issued 70 million shares to finance its purchase of TRW, increasing its stock outstanding 63 percent. Excluding TRW, sales grew 17 percent, Northrop said. Sales of radar and other electronic systems rose 16 percent to $1.5 billion, helped by increased work on Lockheed Martin Corp.'s F-35 Joint Strike Fighter and F-16 fighter-jet programs.

Profit margins at the electronics systems business, based in Linthicum, Md., increased to 10 percent from 5.6 percent, which was one source of the company's better-than-expected results, Dyreyes said.

Integrated Systems, which makes the Global Hawk unmanned spy plane used in Iraq, boosted sales 21 percent to $974 million. Information Technology and Integrated Systems, which sells computer systems and software to government agencies, increased sales 9.1 percent to $1.2 billion.

The company's ships division, the sole producer of nuclear-powered aircraft carriers for the Navy, boosted sales 24 percent to $1.4 billion, led by work on the DD(X) class of destroyers.

Analysts expected Northrop to have profit of $1.01 a share on sales of $6.32 billion in the third quarter.

Northrop said its quarterly results benefited from a $17 million gain resulting from two legal settlements and from the reversal of a reserve related to the cases.

Last year, Northrop decided to sell its component technologies group and two of its electronic-systems businesses, which were then reported as discontinued. It had related losses from discontinued operations of $46 million in the third quarter of this year and $178 million in the year-earlier period.

Including those discontinued operations, Northrop had net income of $184 million, or $1 a share, compared with a net loss of $59 million, or 56 cents, a year earlier.

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