Sales at Falls-Church defense contractors Northrop Grumman and General Dynamics fell in the second quarter, yet profits at Northrop increased as the company cut costs and repurchased a large chunk of its shares.
Profits at General Dynamics were hit as the quarter included a $105 million charge related to the sale of a unit within its combat systems division, the company said.
Both defense giants continued to trim costs to cope with a reduction in government spending.
For the second quarter, Northrop Grumman posted a profit of $511 million, or $2.37 per diluted share, an increase of 4.7 percent from the same period last year, while sales declined by 4 percent to $6.04 billion. Northrop’s technical services unit was the only division that posted a sales increase in the quarter.
The company repurchased 6 million of its shares in the second quarter.
General Dynamics reported a profit of $541 million or $1.58 per diluted share, down from $640 million or $1.81 per diluted share in the same period last year. The company’s sales declined 4.6 percent, with declines in three out of four of its business units. The marine systems division had higher sales due to a contract for Virginia-class submarines. The company’s aerospace division, which manufactures the commercial Gulfstream jet, saw sales decline by 2.8 percent.
In a conference call with investors, General Dynamics’ chief executive Phebe Novakovic said she expected orders for the Gulfstream jet to remain strong through the year.
“We have a solid building block for the future with an increased defense backlog and robust order activity across the portfolio of Gulfstream business jets,” Novakovic said.
General Dynamics’ share price was up 1 percent in late morning trading, while Northrop Grumman’s was up 0.5 percent.