Lockheed Profit Increases 22%

Lockheed Martin Corp. said Tuesday that a surge in combat aircraft sales helped push earnings up 22% in the second quarter, overshadowing higher pension costs and beating Wall Street expectations for the defense giant.

The company earned $296 million, or 66 cents a share, for the quarter, up from $242 million, or 54 cents a share, at the same time a year ago. Analysts surveyed by Thomson First Call had predicted Lockheed would earn 61 cents a share.

Lockheed reported second-quarter sales of $8.78 billion, a 14% increase over last year’s second-quarter figure of $7.71 billion that was mostly attributable to higher sales of fighter jets, including development of the F-35.

“We thought it was one of the best quarters we’ve had in a while,” said Christopher Kubasik, Lockheed’s chief financial officer.

The company’s aeronautics division, which produces combat aircraft and transport planes, saw a 31% rise in sales. Driving that growth was Lockheed’s F-16 fighter jet program, which delivered 22 planes in the second quarter compared with 12 in the second quarter of 2003.

Revenue from sales of Lockheed’s transport planes dipped slightly on fewer deliveries of the C-130J cargo plane, but the company said it has made $35 million in profit on the plane in the first half of the year.

The C-130J was recently criticized in a report from the Pentagon’s Office of Inspector General, which said Lockheed has sold the Air Force planes that don’t meet some military requirements and can’t yet be used in combat zones.

Lockheed and the Air Force disputed the findings, released Friday, saying Lockheed is now delivering C-130Js that meet Air Force guidelines on schedule and within budget. Kubasik noted other militaries, such as the British and Australian air forces, are already using the planes for combat missions.

Sales grew across the company’s five business segments, including 19% increases in the information technology and integrated systems units.

Pension costs continued to weigh on Lockheed. The company reported $148 million in pension-related expenses in the quarter, compared with $68 million last year.

Lockheed shares rose 20 cents to $52.40 on the New York Stock Exchange.