Raytheon Sales Rise But Profit Falls
April 28 2016 - 8:20AM
Dow Jones News
Raytheon Co. on Thursday reported higher sales alongside a sharp
drop in first-quarter profit as the U.S. defense company flagged
strong demand from the U.S., Middle East and North Africa.
Profit fell 27% on a tough comparison from a year ago but
exceeded internal expectations and those of analysts, and orders in
the quarter swelled by more than a third.
Raytheon follows other large U.S. defense companies reporting
this week with an upbeat outlook that included higher full-year
profit guidance and a return to organic growth on the back of
rising Pentagon and overseas business.
The company reported net profit of $405 million for the quarter,
compared with $554 million a year earlier, with per-share earnings
dipping to $1.43 from $1.79 as sales rose 9% to $5.8 billion.
Raytheon Co. has boosted output of precision weapons and has
capacity to produce more as the U.S. and its allies tackle a
shortage of munitions for campaigns in the Middle East. Most of the
profit decline reflected one-off contract payments a year earlier,
though the latest quarter included a $36 million charge on an
overseas program.
The maker of Paveway laser-guided bombs and Tomahawk missiles
has joined other defense companies including Boeing Co. and
Lockheed Martin Corp. in expanded production for the Pentagon,
while countries including Australia and Iraq are seeking thousands
of bombs and missiles.
Raytheon is the most export-driven of the major U.S. companies,
with overseas sales reaching a record 31% last year, while domestic
revenue rose for the first time since 2009.
The company said in January that there has been no impact on
demand from oil-dependent nations in the wake of falling energy
prices, echoing comments this week from executives at most other
contractors, though Lockheed flagged a possible delay to a big
missile-defense deal with Qatar.
Raytheon retained its forecast for revenue to climb to between
$24 billion and $24.5 billion in 2016—compared with $23.2 billion
last year—with per-share earnings ranging from $6.93 to $7.13, up
13 cents from prior guidance on a lower tax charge.
The company is also betting it can leverage the cybersecurity
skills it honed for the U.S. military and intelligence agencies to
sell to banks and retailers, investing almost $1.7 billion last
year to establish a stand-alone business—rebranded as Forcepoint—in
an area where its defense peers have struggled to make money.
Write to Doug Cameron at doug.cameron@wsj.com
(END) Dow Jones Newswires
April 28, 2016 08:05 ET (12:05 GMT)
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