Northrop Sets Stock Split, Lifts Dividend

Northrop Grumman Corp., the world’s largest builder of warships, said Wednesday that it expected sales to climb 7.1% next year as U.S. defense spending rose. The Century City company also raised its dividend and said it would split its stock for the first time since 1984.

Northrop forecast at least 10% growth in 2005 earnings per share on sales of $30 billion. It wasn’t more specific in a statement. Northrop repeated its 2004 forecast for profit from continuing operations of $5.60 to $5.90 a share, which is before the 2-for-1 stock split.

The company said it would increase its quarterly dividend by 15%, to 46 cents a share from 40 cents. The last time Northrop raised its dividend was in 1993, when the payout jumped to 40 cents from 30 cents. The dividend is payable June 5 to shareholders as of May 24.

Northrop, the third-largest U.S. defense contractor, was the only one of the top five that didn’t boost its 2004 forecasts after first-quarter earnings beat analysts’ estimates. Its quarterly profit rose 31%, helped by work on a new warship and demand for spy planes used in Iraq.

“The focus is on execution going forward,” Chief Executive Ron Sugar, 55, said at the company’s annual investor conference in New York. “Program execution and financial execution and finally, a focus on shareholder return.”

Northrop expects cash from operations of $1.5 billion this year and as much as $2 billion next year. It hadn’t provided 2005 forecasts when it gave its 2004 outlook on May 4.

Shares of Northrop rose $1.52 to $98.97 on the New York Stock Exchange.

First-quarter sales at its integrated-systems unit rose 39%, lifted by demand for the Global Hawk unmanned spy plane and the E-2 Advanced Hawkeye airborne early-warning aircraft.

Northrop has forecast that total sales would rise to $28 billion this year, from $26.2 billion. It had profit from continuing operations of $4.32 a share last year. The company was expected to have 2004 profit of $5.89 a share on sales of $28.7 billion, and 2005 profit of $6.83 on sales of $30.8 billion, based on a Thomson First Call survey.

The last time Northrop split its stock was a 3-for-1 split in August 1984. The latest split is payable June 21 to holders as of May 28. Investors will get an additional share for each one owned. After the stock split, the number of Northrop shares outstanding will increase to about 360 million, and the adjusted 2004 profit forecast will be $2.80 to $2.95 a share, Northrop said.