Services Unit Sales Boost Lockheed Profit
Friday, January 23, 2009
Lockheed Martin, the country's largest defense contractor, said yesterday that its profit rose 3 percent because of stronger sales in its information systems and global services unit. That helped to balance lagging sales of airplanes and space systems.
Net earnings for the fourth quarter ended Dec. 31 were $823 million ($2.05 per share), up from $799 million ($1.89) for the same period a year earlier. The results beat Wall Street's average forecast of $1.90 per share. The defense giant's sales rose 3 percent, to $11.13 billion from $10.84 billion.
"Our results for 2008 reflect excellent operational and financial performance across all business areas, despite the difficult economic environment," Robert J. Stevens, chairman and chief executive, said in a statement.
The Bethesda-based company's information systems and global services division accounted for the biggest portion of sales in the quarter, at $3.3 billion. Its electronic systems unit ranked second with $2.93 billion in sales, followed by aeronautics and space systems with $2.87 billion and $2.03 billion, respectively.
For the year, Lockheed Martin reported earnings of $3.22 billion ($7.86), up 6 percent from $3.03 billion ($7.10) in 2007. Sales were up 2 percent, to $42.73 billion from $41.86 billion.
The value of the company's pension fund fell 28 percent in 2008. Lockheed will have to increase its pension expenses this year as the fund has been hit hard by the poor performance of the financial markets.
Bruce L. Tanner, the company's chief financial officer, said Lockheed has an $81 billion backlog of orders, including for its F-16 and C-130J aircraft.
Tanner said that in 2009 Lockheed's information technology and global systems business will outpace the company's more traditional defense contracting in sales volume. He said those business areas would likely be fueled by new contracting opportunities under the Obama administration such as expanding cyber-security and organizing medical records.
Like other major defense contractors, Lockheed is watching closely to see what changes or cutbacks the new administration will make in the huge Pentagon budget as the government grapples with a worsening economy. It is expected that major weapons programs, including Lockheed's F-22 fighter jet, could come under review.