Boeing’s profit rises 20%, Northrop’s falls 27% in 2nd quarter
Aerospace giants Boeing Co. and Northrop Grumman Corp. reported contrasting second-quarter financial results as each coped with a declining Pentagon appetite for weapons.
Boeing, boosted on sales of its commercial jets, said Wednesday that its earnings climbed 20% in the quarter, while Northrop, which relies on the Pentagon for nearly all of its business, posted a 27% decline in profit.
Northrop said it earned $520 million, or $1.81 a share, down from $740 million, or $2.44, a year earlier. The Century City company exceeded analysts’ expectations of $1.68 a share.
Northrop, which has massive facilities in Redondo Beach, El Segundo and Palmdale, reported a 10% drop in sales to $6.6 billion.
The company saw sales decline in all of its business units — technical services, aerospace, electronics and information systems. Its largest unit, aerospace systems, which makes fighter jets and robotic spy planes, experienced the biggest downturn, with sales falling 9% to $2.6 billion.
In a conference call with analysts, Northrop Chief Executive Wesley G. Bush cited reasons for the downturn in sales, namely military force reductions in Iraq and Afghanistan and the federal government’s budget uncertainties.
With rising budget deficits, defense contractors are bracing for a long stretch of cuts in weapon purchases.
The Pentagon is thinking about future military strategy, and will “intersect that with their best understanding as they can of the budget realities,” Bush said. “I think it’s going to take some time.”
Meanwhile, Boeing posted a profit of $941 million, or $1.25 a share, up from $787 million, or $1.06, a year earlier. The Chicago company also exceeded analysts’ earnings expectations of 96 cents a share.
Boeing, which has military and space facilities in El Segundo, Huntington Beach and Long Beach, saw sales jump 6% to $16.5 billion.
The company said commercial aircraft deliveries increased 4% to 118 in the second quarter from a year earlier. Deliveries of its much-anticipated new jet, the 787 Dreamliner, are expected to take place this year.
Northrop and Boeing are among the largest private employers in California. Northrop has about 30,000 employees in the state and Boeing has about 22,000. Each operates large military-related facilities in Southern California.
Boeing shares rose 47 cents, or less than 1%, to $70.63 on Wednesday and Northrop shares fell $2.72, or 4.2%, to $62.68.
