Lockheed, Raytheon Post Higher Earnings

Defense contractors reported higher first-quarter results Tuesday as Lockheed Martin Corp. beat Wall Street estimates, thanks to increased fighter jet sales, and a jump in missile sales helped Raytheon Corp. return to profitability.

Overseas demand for Lockheed’s F-16 fighter and stepped-up development of the Bethesda, Md.-based company’s F/A-22 and F-35 Joint Strike Fighter accounted for a 57% increase in aeronautic sales. The company also raised its 2003 outlook, citing stronger sales and debt reduction efforts.

Lexington, Mass.-based Raytheon, maker of the Tomahawk cruise missile, used heavily in the Iraq war, reported an 18% increase in missile sales. That gave it a more favorable comparison with the first quarter of last year, when it posted a large loss because of a charge from the sale of a business unit.

Lockheed reported earnings of $250 million in the three months ended March 31, or 55 cents a share, compared with $218 million, or 49 cents, a year earlier.

The earnings easily beat the consensus estimate of 42 cents a share by analysts surveyed by Thomson First Call.

Sales for the quarter were $7.1 billion, up 18% from $6 billion in the same quarter last year. Much of that was attrib- utable to aircraft sales, which grew to $2.01 billion from $1.33 billion.

For the year, Lockheed said it expected to earn $2.20 to $2.30 a share, up from its earlier guidance of $2.15 to $2.20. The company also said it expected sales to be 8% to 12% higher than in 2002.

Company executives said the outlook was raised in part because of Lockheed’s continued effort to whittle its debt and reduce interest payments.

This month, Lockheed signed a $3.5-billion contract with Poland for 48 F-16 fighters, which would add to the record $74.6-billion backlog the company reported in the first quarter.

Lockheed executives said the company didn’t expect any short-term effects from a strike at its Fort Worth plant that makes F-16s and the midsection of the F-22.

About 4,000 employees went on strike, demanding higher wages and better medical insurance.

Raytheon earned $95 million, or 23 cents a share, contrasted with a loss of $583 million, or $1.44, in the year-earlier quarter, which included a large one-time charge.

Analysts surveyed by Thomson First Call had expected 26 cents a share on that basis.

Raytheon President Bill Swanson said first-quarter bookings for new business rose 36% from a year earlier and were ahead of company plans by $1 billion. And that was before the war in Iraq.

Raytheon’s sales in the latest quarter were $4.2 billion, up from $3.9 billion a year earlier. During the quarter, the Navy awarded Raytheon a $225-million contract to produce upgraded Tomahawks.

Shares of Lockheed rose $3.30 to $48.55, and Raytheon rose 92 cents to $29.75, both on the New York Stock Exchange.