General Dynamics' Quarterly Profit Up 25%

General Dynamics' second-quarter profit rose 25 percent, boosted by higher sales of armored vehicles and tanks, the defense contractor said yesterday. The company also raised its full-year earnings outlook.

General Dynamics' stock jumped nearly 7 percent, to close at $89.27.

The Falls Church company earned $641 million ($1.60 a share) in the latest quarter, compared with $518 million ($1.27 a share) a year earlier. Excluding a 9-cent gain from a tax refund lawsuit settlement, earnings were $1.51 per share.

Quarterly revenue rose nearly 11 percent, to $7.3 billion.

Helped by expectations of a boom in sales for its corporate jets and continued business in heavily armored vehicles, General Dynamics significantly raised its 2008 outlook. The company now expects a range of $6.00 to $6.05 per share. Previous company guidance was $5.55 to $5.65 per share for 2008.

"We have performed extremely well so far this year and built a backlog that positions us very well for the foreseeable future," chief executive Nicholas Chabraja said.

General Dynamics, which makes tanks, submarines, warships and Gulfstream private jets, has reaped big profits in recent quarters as the Pentagon scrambles to buy and replace equipment for the occupations in Iraq and Afghanistan.

The company is one of several contractors working on the mine-resistant ambush-protected vehicles, also known as MRAPs, that are in high demand to protect troops from roadside bombs.

The Pentagon made the program its top weapons-buying priority last year. The program is winding down, but last week the Marine Corps awarded General Dynamics a contract to built 773 MRAPs with a potential value of $552 million.

Sales growth was highest in the company's combat systems division, rising 17.7 percent to $2 billion. The aerospace unit, made up of Gulfstream, had sales grow 10 percent to $1.3 billion. Sales in information technology were up nearly 7 percent, to $2.5 billion, and rose 9.6 percent, to almost $1.4 billion, in marine systems.

The company expects robust sales of its corporate jets, primarily in overseas markets including China and the Middle East. The company recorded a backlog of orders worth $18.8 billion, up from $10 billion in the second quarter of 2007.

But the fate of a big shipbuilding project remains unclear. Members of Maine's congressional delegation said Tuesday that the Navy has said it will build only two of the advanced DDG-1000 Zumwalt destroyers the service had planned for an upgrade of its fleet. The ship, being built at General Dynamics' Bath Iron Works subsidiary in Maine, proved costly, more than double the $1.3 billion cost of existing destroyers.

Chabraja said the company has not been notified by the Navy on the ship, but noted that "I believe what I am reading in the press reports about the Navy's posture."