General Dynamics Corp., maker of submarines and Abrams tanks, said yesterday that its profit rose 20 percent in the fourth quarter as sales of information technology and combat equipment continued to drive growth.
The Falls Church-based defense contractor reported net income of $336 million ($1.66 per share) in the quarter, compared with $279 million ($1.40) in the same period last year. Revenue increased 9.7 percent, to $5.19 billion.
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For the year, General Dynamics reported net income of $1.23 billion ($6.09), compared with $1 billion ($5.04) in 2003. Revenue for the year increased 17 percent, to $19.18 billion from $16.37 billion in 2003.
On the New York Stock Exchange, General Dynamics' stock rose 3.8 percent, or $3.71, to close at $102.48 yesterday.
The company reported that revenue from its information technology operations increased 27 percent, to $1.86 billion in the quarter, and operating earnings rose 32 percent, to $181 million. For the year, IT revenue climbed 39 percent, to $6.78 billion, and operating earnings rose 33 percent, to $715 million.
The war in Iraq also helped fuel sales for the company's combat systems unit, whose products and services include tank ammunition and repair. The unit reported a 5.5 percent increase in revenue for the quarter, to $1.31 billion, and a 31 percent increase in operating earnings, to $171 million. For the year, revenue increased 10 percent, to $4.41 billion, compared with $4.01 billion in 2003. Operating earnings totaled $522 million, up from $443 million the previous year.
The shipbuilding unit, whose products include submarines and military destroyers, struggled last year with rising costs on a contract to build four commercial oil tankers. The unit's revenue and operating earnings were flat in the quarter, at $1.12 billion and $51 million, respectively. The quarter included a $19 million charge related to the tanker program. Company officials provided little information about the charge.
The unit "continues to have some nagging problems with the tanker program," Nicholas D. Chabraja, chairman and chief executive, said in a conference call with analysts, noting higher steel prices and "issues" related to a subcontractor.
The results in the shipbuilding business "were weaker than our forecast," said Byron K. Callan, aerospace and defense analyst with Merrill Lynch & Co.
For the year, operating earnings in the shipbuilding unit increased to $292 million, from $216 million in 2003, as the company delivered two submarines to the Navy. Revenue rose 11 percent, to $4.73 billion.
The aerospace unit, which makes the Gulfstream business jet, continued to recover from a sluggish market, reporting a 40 percent jump in operating earnings, to $116 million in the quarter. Revenue for the period rose slightly, to $837 million from $829 million. For the year, revenue increased a little more than 2 percent, to $3.01 billion, and operating earnings rose 80 percent, to $393 million.