Northrop’s fourth-quarter profit falls 9%
Northrop Grumman Corp.’s earnings dropped 9% in the fourth quarter as the nation’s third-largest military contractor saw sales decline in aerospace, electronics and information systems.
The Century City aerospace giant — which has massive facilities in Redondo Beach, El Segundo and Palmdale — experienced a 3% drop in sales to $8.6 billion for the quarter. Northrop also had a one-time $231-million charge related to debt buybacks.
For the quarter, Northrop earned $376 million, or $1.27 per share. That’s down from $413 million, or $1.31 per share a year earlier. However, the company exceeded analysts’ expectations of $1.01 a share.
Sales in the company’s largest unit, aerospace systems, which makes fighter jets and robotic spy planes, fell 4% to $2.7 billion. The electronics unit, which makes navigation systems and radar for military aircraft, saw sales go down 10% to $1.9 billion. Information systems’ sales were down 4% to $2.1 billion.
Sales in its smaller technical services sales jumped 6% to $795 million. The company’s shipbuilding unit — which makes nuclear submarines, aircraft carriers and amphibious ships — had a 4% sales increase to $1.7 billion.
Northrop plans to spin off its shipbuilding unit this year. The company, which hinted at the move in July, said the decision will allow it to focus on businesses that offer higher profit margins.
Northrop Chief Executive Wesley G. Bush said in a conference call that the company is positioning itself for a pullback in spending from its biggest customer, the U.S. government.
“We’re proactively responding to budget challenging by streamlining our businesses, reshaping our portfolio and reducing our footprint and costs,” he said. “Our highest priorities are building on the performance improvements we delivered in 2010, while continuing to strengthen our culture of performance across our entire organization.”
The company, which has about 30,000 employees in California, had full-year earnings of $2.1 billion, or $6.77 per share, a 22% jump from 2009. It chalked up $34.8 billion in sales in 2010, up 3% from $33.8 billion the year earlier.
In 2011, Northrop projects revenues to drop to $27.5 billion because of the anticipated shipbuilding spin-off. But it expects profit of $6.40 to $6.60 a share.
Northrop’s shares closed Wednesday at $71.87, up 78 cents.
