Lockheed Profit Up 53%, but Aircraft Business Was Flat

Lockheed Martin Corp., the Bethesda defense contractor, said yesterday that fourth-quarter profit increased 53 percent, boosted by one-time gains, as results for its signature aircraft business were flat.

Lockheed has increasingly relied on information technology work for the Pentagon and other federal agencies to offset long-term expectations that defense spending on traditional weapons programs will decline. During the fourth quarter, the systems and IT unit reported a 3 percent increase in revenue, to $5.3 billion, and a 6 percent increase in operating profit, to $519 million. Revenue in the aeronautics unit, maker of the F-16 and F-22 fighter jets, increased 1 percent, to $3.04 billion.

The company will pursue more work helping the Pentagon with logistics and is targeting agencies looking to outsource jobs, Christopher E. Kubasik, Lockheed's chief financial officer, said in an interview. "That's how we're going to grow the business," by expanding offerings, he said.

During the fourth quarter, Lockheed reported profit of $568 million ($1.31 per share), up from $372 million (84 cents) in the fourth quarter of 2004. The results were helped by $55 million from the sale of shares in Inmarsat Inc., a satellite company, and the sale of telecommunications firm NeuStar Inc. Revenue increased 2.6 percent, to $10.2 billion.

For the year, Lockheed reported revenue of $37.2 billion, up 4.7 percent, from 2004. Profit was $1.8 billion, up 44 percent.

There were problems during the year with two large Lockheed programs. The Army canceled its contract for an $8 billion spy plane and one of its space programs fell further behind schedule.

"We did have some disappointments that were not in keeping with expectations or our standards," said Robert J. Stevens, Lockheed's chief executive. Both programs are "reminders of the difficulty associated with complex technology as well as the continuing need on our part to set high standards and meet those standards."

Lockheed said it would reach at least $38 billion in revenue this year. Earnings are estimated to be slightly higher than previously expected, $4.50 to $4.75 per share, because of the Inmarsat stock sales and the sale of Space Imaging LLC assets. Lockheed Martin shares rose $1.98 yesterday, to $66.99.

"Overall, the quarter was in line with expectations," Joseph B. Nadol, industry analyst for the J.P. Morgan Securities Inc., said in a research note. "The upward revision of 2006 guidance looks very strong on the surface," though mostly it was because of more one-time gains, rather than operating profits, he said.