Datron Cites Defense Cuts as Cause of Lower Profits

Datron Systems Inc., citing defense cuts, said its fiscal third-quarter profit dropped 26% from a year earlier despite a 17% increase in sales.

Datron, a Simi Valley-based maker of satellite products and other communications equipment, said net income in the quarter ended Dec. 31 fell to $876,000 from $1.19 million a year earlier. Its sales climbed to $19.7 million from $16.8 million.

The lower earnings reflect “the rapid downsizing” in defense spending, which in turn “has adversely impacted production flow,” Datron President David A. Derby said in a statement. The company expects “further erosion in profit margins in the defense side of the business,” although Datron is trying to expand its international and commercial sales, he said.

For the first nine months of its fiscal year, Datron’s profit nearly tripled from a year earlier, to $3.05 million from $1.08 million, and its nine-month sales rose 35%, to $55.5 million from $41 million.