Northrop beats expectations with higher second-quarter profit
Bolstered by sales of robotic planes and radar systems, military contractor Northrop Grumman Corp. said second-quarter earnings nearly doubled from a year earlier.
Northrop’s earnings rose to $711 million, or $2.34 a share. That’s up 93% from last year’s $368 million, or $1.21 a share. Analysts, on average, had expected $2.19 a share.
The Century City aerospace giant, which has sprawling facilities in Redondo Beach, El Segundo and Palmdale, said sales rose 3% to $8.8 billion.
With the better-than-expected results, Northrop said it was bumping up its 2010 earnings estimates by 85 cents to a range of $6.60 to $6.80 a share. It is the second straight quarter that the company has increased its estimates.
Northrop Chief Executive Wesley G. Bush said in a conference call that the company was well-positioned for the slowdown in Pentagon spending because much of its business is involved in developing high-tech products that are in demand, including cyber security and unmanned aircraft.
“Clearly the fiscal environment going forward will be challenging and the competition for funding even more intense,” Bush said. “We’ve been proactively positioning Northrop Grumman to compete and succeed in this environment.”
Four of the company’s five business units saw sales increases.
The largest unit, aerospace systems, which makes fighter jets and robotic spy planes, increased 6% to $2.8 billion. The technical services business, which provides maintenance and support to weapons systems, experienced the biggest jump: 14% to $800 million.
The only exception was a 1% revenue decline in information systems as it won fewer contracts from local and state governments for computer services.
The shipbuilding unit — which makes nuclear submarines, aircraft carriers and amphibious ships — increased 5%, although it experienced a $16-million operating loss because of a $113-million pretax charge related to the company’s decision to consolidate its two Gulf Coast shipyards.
Northrop announced the consolidation in July and hinted it may get out of the shipbuilding business altogether. The company is closing its Avondale, La., facility, which employs 5,000 people, and merging it with its Pascagoula, Miss., shipyard, about 125 miles away.
Raytheon Co., which has a large presence in Southern California, said second-quarter profits slipped 58% to $208 million. The Waltham, Mass., military contractor employs about 7,000 people in El Segundo through its space and airborne systems unit. That part of Raytheon’s business saw a 9% jump in revenue to $1.2 billion.
Northrop shares inched up 5 cents to $58.44, while Raytheon fell $1.60 to $46.67.
