By CHRISTOPHER DREW See original at http://www.nytimes.com/2010/10/20/business/20arms.html?ref=christopher_drew .
Lockheed Martin on Tuesday cut its earnings forecast for 2010, and said delays in the award of Pentagon programs would hurt its sales growth and leave profits flat in 2011.
The company, the world’s largest military contractor, said the percentage growth rate in its sales would slow to the “low single-digit range” next year as a long surge in Pentagon spending comes to an end.
Lockheed also announced that its third-quarter profit from continuing operations had dropped 28 percent to $565 million, or $1.55 a share, from $786 million, or $2.04 a share, a year earlier. Sales rose 6 percent to $11.4 billion, from $10.77 billion during the same period a year ago. Analysts, on average, had estimated that the company would earn $1.53 a share on revenue of $11.59 billion, according to Thomson Reuters.
The drop in quarterly profit was partly a result of a $178 million charge for a buyout program for 600 executives. The company said the reduction in its forecast for 2010 earnings also reflected plans to divest units and add more money to its pension funds.
Lockheed, based in Bethesda, Md., said it now expected its full 2010 earnings per share from continuing operations to be $6.75 to $6.95, down from the previous range of $7.15 to $7.35.
As the Pentagon moves to save $100 billion through tighter contracting and other measures, Lockheed said it faced further pressures, with some plans for new programs were being canceled or delayed.
Bruce L. Tanner, Lockheed’s executive vice president and chief financial officer, said possible contracts for a Navy ship that could operate in coastal waters and for missile defense systems had been delayed by several months, reducing the amount of new business it expected in early 2011.
He said that the company’s expansion into solar energy had also developed more slowly than expected.
Mr. Tanner said in an interview that the company had hoped this energy business would bring in hundreds of millions in sales by 2011. But with utilities and local governments also canceling and delaying projects, “we’re not expecting it to be anywhere near that level,” he said.
Mr. Tanner said Lockheed’s aeronautics business should show strong growth next year. It will benefit from production increases for the new F-35 fighter, a radar-evading plane that is expected to become the main fighter for the United States and a number of its allies.
But Britain’s prime minister, David Cameron, said Tuesday that his government would order fewer of the F-35s than the 140 that his country had previously sought. He also said Britain would buy a version of the F-35 that could be catapulted from an aircraft carrier rather than a more expensive variant that can take off almost vertically.
Lockheed’s chief executive, Robert J. Stevens, told analysts that while the company would lose some sales to Britain, it expected to offset the losses through sales to countries in the Middle East and Asia.
Canada and Israel both recently announced plans to buy the F-35. Company officials still expect to eventually sell more than 3,000 of the planes.
The company’s stock was down 55 cents to $69.49 a share in the afternoon.