Defense contractor Lockheed Martin's earnings up 19 percent in fourth quarter

January 27, 2011

Lockheed Martin, the world's largest defense contractor, reported Thursday that its fourth-quarter profit grew nearly 19 percent, aided by the sale of one unit and increased revenue in its electronic systems group.

The Bethesda-based company reported earnings of $983 million ($2.73 per share) in the three-month period, up from $827 million ($2.17) in the same period a year earlier. Quarterly revenue grew slightly, to $12.79 billion.

The results included the sale of a consulting unit called the Enterprise Integration Group. Without the $184 million gain, the company's profits from continuing operations declined 0.84 percent to $829 million, or $2.30 per share.

Lockheed plans to sell another unit called Pacific Architects and Engineers by the end of March, said Bruce L. Tanner, Lockheed's chief financial officer. Tanner said he did not expect Lockheed to sell off any other operations after that.

"I don't see any divestitures on the horizon," he said.

Though the company's electronic systems boosted earnings, its aeronautics, information systems and space systems divisions saw their profits decrease from the same quarter a year earlier.

In a conference call with investors, Lockheed chief executive Robert J. Stevens attributed the electronic systems unit's success to a contract win to provide the first of up to 10 close-to-shore combat ships, as well as a key missile defense award.

Overall, the company reported lower earnings for the year. Profit in 2010 dropped about 3.2 percent to $2.93 billion ($7.94 per share), down from $3.02 billion ($7.78) in 2009. Revenue, however, increased about 4 percent to $45.8 billion.

Thursday, Tanner touted the company's strong showing in new orders. Lockheed received more than $20 billion in orders last quarter and nearly $47 billion for the year, the largest annual order level in its history, he said.

As a result, Lockheed's backlog of work - or orders yet to fulfill - is now $78 billion, $1 billion more than its backlog at the start of 2010, according to Tanner.

He forecast that Lockheed will see sales grow this year at a "low, single-digit rate" with profit remaining relatively flat.

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