Defense firm Northrop Grumman's second-quarter profit rose nearly 81 percent
Friday, July 30, 2010
Defense contractor Northrop Grumman, which is relocating to Northern Virginia, said Thursday that its second-quarter profit rose nearly 81 percent, fueled by increased sales as well as a tax benefit of nearly $300 million.
The Los Angeles-based company reported that it earned $711 million ($2.34 a share) in the quarter, up from $394 million ($1.21) in the comparable period a year ago. Revenue grew 3.3 percent, to $8.83 billion.
Northrop has made moves aimed at streamlining the company, including divesting its advisory services business, realigning its shipbuilding business and moving its headquarters.
Chief executive Wes Bush said Thursday in a conference call with investors that the company continues to reshape its portfolio.
"We are walking away from things that might give us a nice run on the top line but really don't achieve what we're trying to do from a profitability perspective," Bush said.
Northrop said sales increased in all but one of its five divisions, with strong results reported by its aerospace and information systems groups.
Earnings in aerospace increased by 30 percent over the same quarter of last year, to $335 million, which the company attributed to higher-volume sales of both manned and unmanned aircraft.
Though sales dropped slightly in the information systems unit, the group's operating profit hit $205 million, a 26 percent jump from last year's second quarter.
Bush said that the information systems business benefited from the company's agreement with Virginia to rework its massive computer services contract.
The company's move to the Washington region -- slated for completion by next summer -- is prompting Northrop to take a close look at the size of its corporate staff, Bush said.
Though he declined to say how many people might be affected, Bush said the move provides "an important opportunity for us to resize our corporate office, and we are doing that." Bush said the company expects to hire locally, anticipating that not all of its employees will relocate.
The tax benefit of $296 million, related to an Internal Revenue Service review of tax returns from 2004 through 2006, was partly offset by a $113 million charge linked to the company's announcement two weeks ago that it would consolidate its shipbuilding operations.
Northrop Grumman repurchased 6.5 million shares of stock this quarter. The company said Thursday that it would increase its anticipated earnings per share for the year significantly, from a range of $5.75 to $6.00 to a range of $6.60 to $6.80.