Northrop Profit Beats Forecast
Northrop Grumman Corp., maker of the B-2 bomber and combat radar systems, Wednesday posted a 4% increase in fourth-quarter profit, beating Wall Street forecasts on gains in its electronic sensors and information technology sectors.
The Los Angeles-based company also said it was optimistic about prospects for growth due to an expected boost in defense spending by the Bush administration.
Meanwhile Wednesday, Northrop, which plans to buy rival defense contractor Litton Industries Inc., said the boards of both companies approved amending their $3.8-billion merger pact to give Litton shareholders the added option of receiving tax-free Northrop stock instead of having only the possibility of receiving cash.
Northrop, the No. 5 U.S. defense contractor, said it earned $144 million, or $1.99 a share, from continuing operations in the quarter, up from $139 million, or $1.98 per share, a year ago. Analysts expected the company to earn $1.97 a share, according to First Call/ Thomson Financial.
Shares of Northrop fell $3.50 to close at $86 on the New York Stock Exchange, off a year high of $93.88 but up from a low of $42.63. Woodland Hills-based Litton fell 31 cents to close at $78.69.
Earnings excluding pension fund income, or economic earnings, totaled $106 million, or $1.46 a share, Northrop said. Pension fund proceeds account for a significant portion of the company’s earnings, making Northrop unique in the defense and aerospace sector but sensitive to weak equity markets.
Sales for the quarter rose 2%, to $2.23 billion from $2.18 billion a year ago.
For 2001, Northrop said it expects earnings before pension fund income of $6.80 to $7.10 per share. The planned Litton acquisition should boost earnings before pension fund income by 7% to 10% in 2001, the company said.
Northrop Chairman and Chief Executive Kent Kresa said he was optimistic about prospects for further growth. “We are beginning to witness the long-awaited upturn in defense spending, which we believe bodes well for our programs and technologies,” he said.
In 2000, the company reduced net debt by $750 million to $1.3 billion. Contract acquisitions rose 20% to $9.2 billion and business backlog at Dec. 31.
In another Southern California company earnings report, El Segundo-based International Rectifier, a maker of power semiconductors, reported higher fiscal second-quarter net income of $46.5 million, 71 cents per share on revenue of $268.1 million, compared with net income of $12.4 million, or 23 cents, on revenue of $171.1 million in the previous-year quarter.
