Northrop Grumman 2Q profit falls on tough comps
Thursday, July 28, 2011
LOS ANGELES (AP) — Northrop Grumman’s second-quarter profit tumbled 30 percent on tough comparisons to the same period last year, when it recorded a $298 million tax benefit.
The Los Angeles defense contractor posted a profit from continuing operations of $520 million Wednesday, or $1.81 per share, down from $740 million, or $2.44 per share, last year.
Yet revenue for the April-to-June quarter fell 9.6 percent to $6.56 billion from $7.26 billion, largely as a result of cutbacks in U.S. Defense Department spending, Northrop said.
Company shares slid more than 4 percent to close at $62.68 Wednesday.
Analysts, on average, expected a profit of $1.68 per share on $7.2 billion in sales, according to a FactSet survey.
Like other defense contractors, Northrop has lost sales as the Pentagon grapples with a severely tightened budget and prepares for larger withdrawals from Iraq and Afghanistan.
Northrop said lower demand for systems used by the military cut sales at its electronic systems division by 9.7 percent to $1.79 billion, while lower demand from manned aircraft and civil space programs reduced sales at its aerospace division by 8.8 percent to $2.59 billion.
Information systems sales fell 4.3 percent to $2.03 billion on lower defense systems volumes, while technical services sales dropped 18 percent, largely as a result of Northrop’s reduced participation in a Nevada joint venture program.
Excluding a pension-related gain in the recent quarter and the tax benefit in the 2010 period, the company said it posted an adjusted profit of $1.59 per share, up from $1.46 per share.
Northrop Grumman Corp. boosted its profit prediction for 2011, saying it expects margin improvements and pension income of about $400 million to offset the effects of lower sales.
The company said it now expects earnings from continuing operations of $6.75 to $6.90 per share, up from its April prediction of $6.50 to $6.70 per share. But Northrop cut its sales forecast for the year to about $27 billion from its previous prediction of about $27.5 billion.
Analysts polled by FactSet expect a profit of $6.74 per share on $28 billion in sales.