By Dana Hedgpeth
Washington Post Staff Writer
Thursday, January 29, 2009
General Dynamics, a Falls Church-based defense contractor, said yesterday that its profit for the fourth quarter rose nearly 6 percent, to $612 million ($1.57 per share), fueled in part by increased profit in its business jets and shipbuilding divisions that outweighed a fall in its tank and armored vehicle unit.
Sales for the quarter were up 4.5 percent, to $7.85 billion. But sales fell for the combat systems unit as its contract to build heavily-armored mine-resistant vehicles for the Army to use in Iraq comes to an end.
Earnings were close to analysts' expectations of $1.59 per share.
For the year, General Dynamics said its net income was $2.46 billion ($6.17), up 18.7 percent from $2.07 billion ($5.08) in 2007. Sales were up nearly 8 percent, to $29.3 billion.
The company said its backlog grew by $13.6 billion in the quarter, but analysts predict it is likely to see a slowdown in orders -- and perhaps more cancellations -- for its Gulfstream private jets, as the economy continues to falter.
Heidi Wood, an analyst at Morgan Stanley, said in a research note that sales of business jets could be "on ice" as the recession continues and owners of private jets sell them -- which would result in "cannibalizing new plane demand."
Another defense giant, Boeing, also reported earnings yesterday. The largest maker of airplanes, based in Chicago, said it lost $56 million (8 cents) for the quarter because it was hit harder than expected by a now-settled machinists' strike. Revenue was down 27 percent, to $12.68 billion. Analysts had predicted earnings of 78 cents.
For the year, Boeing said its net income fell 34 percent, to $2.7 billion ($3.71), from $4.07 billion ($5.28) in 2007. Revenue fell to $60.93 billion from $66.39 billion.
Boeing also said it would slash about 10,000 jobs. Its move comes as contractors are becoming worried about the impact of cuts in defense spending under the Obama administration.