Litton Surpasses Quarter’s Lower Profit Forecast

Litton Industries Inc. on Wednesday reported lower fiscal first-quarter earnings, but surpassed revised Wall Street forecasts due to strength in its recently refocused core operations.

Litton, the largest builder of nonnuclear ships for the Navy, said profit from continuing operations declined 10% to $44.9 million, or 97 cents a share, for the quarter ended Oct. 31, down from $49.99 million, or $1.07, a year earlier. Revenue grew 8% to $1.08 billion.

The Woodland Hills-based company warned on Sept. 6 that operating profit and margins would drop for the quarter because it was taking more time than expected to build oil tankers for Philips Petroleum Co. and warships for the Navy.

Analysts then revised their forecasts for Litton to 95 cents a share from $1.24 a share, according to tracking firm First Call/Thomson Financial.

In November, the company announced plans to sell its defense electronics unit, which accounted for about 28% of annual revenue. The planned sale was part of a strategic move to focus on high-growth markets such as telecommunications, broadband communications, information security and shipbuilding. Litton has classified the business as discontinued operations, Bloomberg News said.

Litton’s first-quarter results, excluding discontinued operations, fell 5% to $34.4 million, or 74 cents per share.

Litton’s electronic components and materials segment reported a 25% increase in sales and 34% increase in operating profit for the quarter on strong demand from telecommunications and networking customers.

The ship-systems group’s operating profit declined 22% to $45.7 million as revenue rose 18% to $544 million. The segment’s operating profit margin was 8.4% for the quarter, meeting company targets, versus 12.4% a year ago.

The increasing mix of lead-ship activity on double-hulled polar tankers and commercial cruise ships hurt the segment’s margin, Litton said.

Shares of Litton closed up 25 cents at $59.19 on the New York Stock Exchange. The stock is still off its 1999 high of $73.88, hit in June.