Northrop’s Profit Soars 66% in 1st Quarter
Northrop Grumman Corp., the fifth-largest U.S. defense contractor, on Monday said that its first-quarter profit rose 66%, mostly from pension income and its information services businesses.
Net income was $173 million, or $2.47 a share, compared with profit from operations of $104 million, or $1.50, a year earlier. Profit beat the average analysts’ estimate of $1.80 in a First Call/Thomson Financial poll. Sales fell less than a percentage point to $2.09 billion.
Pension income in the quarter rose 81% to $150 million. The Defense Department lets companies bill the government for pension contributions made to employees working on government contracts as reimbursed costs. The payments have typically exceeded actual costs, and the companies record the difference as income.
Northrop, based in Century City, revised its earnings forecast for 2000 to between $9.30 and $9.60 a share because of the higher pension income and the recent quarter’s results. It expects $600 million in pension income this year. The company was expected to earn $7.78 a share this year, the average estimate of analysts polled by First Call/Thomson.
Northrop expects revenue in 2001 to rise by a percentage rate in the mid-single digits and forecasts a double-digit earnings gain, Chairman and Chief Executive Kent Kresa said on a conference call.
“I’m generally very bullish for the future,” Kresa said.
Northrop said last week it’s in talks to sell its business that makes commercial aircraft structures such as the fuselage for Boeing Co.’s 747 jetliner. The company is focusing more on its defense electronics and information businesses.
In the year-ago quarter, Northrop took a charge of $16 million, or 24 cents a share, for an accounting change. That cut net income to $88 million, or $1.26.
Northrop shares rose $3.44 to close at $70.44 on the New York Stock Exchange.
At a Glance
Other earnings, excluding one-time gains and charges unless noted:
* Arden Realty Inc., a Los Angeles-based office real estate investment trust, reported first-quarter funds from operations of $44.4 million, 68 cents per share, compared with $41.8 million, or 64 cents, a year ago. Revenue rose to $90.5 million from $80 million.
* Guitar Center Inc., the Agoura Hills-based musical instrument retailer, reported first-quarter net income of $4.1 million, or 19 cents per share, compared with $2.5 million, or 11 cents, a year ago. Revenue rose 30% to $175.8 million from $135.4 million. Same-store sales for the period rose 8%. During the quarter, the 72-store chain opened four stores.
* WellPoint Health Networks Inc., parent company of Blue Cross of California and one of the nation’s largest health insurers, reported fiscal fourth-quarter profit that beat Wall Street estimates by a penny. The Thousand Oaks-based company said it earned $79.6 million, or $1.23 a diluted share in the quarter ended March 31, compared with $71.1 million, or $1.04 a share, a year earlier. Premium revenue rose to just under $2 billion in the first quarter from $1.6 billion in the same 1999 period.
Analysts had expected the company to earn $1.22 a share, according to First Call/Thomson Financial. WellPoint said membership in its medical plans rose to 7.5 million at the end of the first quarter, from 6.9 million in the 1999 quarter.
