By Shivansh Tiwary and Mike Stone
(Reuters) – Lockheed Martin forecast its 2024 profit below Wall Street expectations on Tuesday, as the U.S. defense contractor’s largest aeronautics segment that makes the F-35 jets faces supply chain disruptions.
U.S. defense firms are seeing a notable increase in orders amid escalating tensions between China and the Philippines, the ongoing conflict between Russia and Ukraine, and in the Middle East. However, pandemic-related disruptions in labor and supply chains are weighing on the sector.
Lockheed said in October its production rate was impacted by low availability of processor assemblies, solid-rocket motors, castings and forgings, and its F-35 program had taken the worst hit.
Net sales from the F-35 program fell $275 million in the fourth quarter from a year earlier.
Some analysts have raised concerns around the risks associated with supply chain disruptions, which they fear are not likely to dissipate quickly.
Bethesda, Maryland-based Lockheed on Tuesday forecast 2024 profits in the range of $25.65 to $26.35 per share. Analysts on average are expecting a profit of $26.62, according to LSEG data.
It also reported a 2.4% drop in fourth-quarter net income to $1.87 billion from a year earlier. On per share basis, however, profit rose to $7.58 from $7.40.
Sales in the company’s largest aeronautics business declined 0.3%, while total sales for the company fell 0.7% to $18.87 billion in the quarter ended Dec. 31.
Revenue at the Missiles and Fire Control unit, which makes High Mobility Artillery Rocket System, fell 3.5% to $3.17 billion.
Lockheed’s earnings are seen as a bellwether for the arms sector. Rivals Northrop Grumman and General Dynamics are due to report quarterly results later this week.
Lockheed expects 2024 sales in the range of $68.50 billion to $70 billion, above analysts’ average expectations of $68.66 billion.
(Reporting by Pratyush Thakur and Shivansh Tiwary in Bengaluru; Editing by Shinjini Ganguli)
Comments