Lockheed Martin beats profit estimate, raises 2018 forecast
(Reuters) - Lockheed Martin Corp (LMT.N), the Pentagon’s No.1 weapons supplier, reported a better-than-expected quarterly profit and raised its full-year forecast, driven by higher sales of its stealthy F-35 combat jets.
A sign at the new Lockheed Martin Manufacturing Centre of Excellence is seen at the company's headquarters in Ampthill near Bedford, Britain June 9, 2016. REUTERS/Peter Nicholls/File Photo GLOBAL BUSINESS WEEK AHEAD PACKAGE - SEARCH "BUSINESS WEEK AHEAD JULY 18" FOR ALL IMAGES
Shares of the company rose 1.4 percent to $363.7 in premarket trading on Tuesday after the company released its earnings.
Revenue from the company’s aeronautics business, which makes the F-35 jet, rose 6.7 percent to $4.4 billion. The business accounted for about 38 percent of its total revenue in the quarter.
The F-35 jet is central to the company’s growth and already delivers about a quarter of its sales.
The program has been in the news recently after Reuters reported this month that the U.S. Department of Defense stopped accepting most deliveries of the F-35 over a dispute about who will cover costs for fixing a production error.
The dispute centers around whether Lockheed or its customer should pay what a source said was $118 million dollars to fix a corrosion issue discovered last year. The source spoke on condition of anonymity. Lockheed confirmed on April 11 that the Pentagon had halted deliveries of the jet over a contractual issue, but did not give further details.
During Tuesday’s earning’s conference call with Wall Street analysts there could be a “focus on recent F-35 newsflow,” analyst Robert Stallard of Vertical Research said in a note.
He added that “this was a good operating quarter from Lockheed, with an operations/tax boost to the earnings per share.”
Following the U.S. tax law change passed last year, Lockheed reported its effective tax rate was 14.9 percent compared with 23.8 percent for the same quarter last year.
The Bethesda, Maryland-based company raised its 2018 net sales forecast to a range of $50.35 billion to $51.85 billion from a range of $50 billion to $51.50 billion.
Full-year profit is now expected to rise between $15.80 and $16.10 per share, compared with its earlier estimate of $15.20 to $15.50 per share.
Net income rose to $1.16 billion, or $4.02 per share, in the first quarter ended March 25 from $789 million, or $2.69 per share, a year earlier.
Net sales rose to $11.64 billion from $11.21 billion.
Analysts were expecting an adjusted profit of $3.40 per shares and revenue of $11.6 billion, according to Thomson Reuters I/B/E/S.
Up to Monday's close, Lockheed's shares had risen 31.3 percent in the past 12 months, compared with a 13.7 percent rise in the S&P 500 index .SPX.