Lockheed Martin Corp. (LMT) forecast a key profit measure could
rise by as much as 17% in 2014 as the defense contractor continues
an efficiency drive to counter the impact of a second year of flat
or declining sales.
The guidance came Thursday as Lockheed reported fourth-quarter
profit fell 14% to $488 million, falling short of expectations for
the first time in three quarters, and weighed by restructuring and
other special charges as revenue dipped 4.7%.
Lockheed forecast full-year sales will be between $44 billion
and $45.5 billion in 2014 compared with $45.4 billion last year,
but per-share profit from continuing operations is seen at $10.25
to $10.55, an advance from last year's $9.04.
The initial guidance from the world's largest defense contractor
by revenue follows a stabilizing outlook for U.S. military spending
over the next two years, though concerns are emerging about the
robustness of overseas business that many companies are chasing.
Canada recently canceled an army vehicle program, and a number of
deals with Middle East nations are taking longer than expected to
complete.
Lockheed's leading position in relatively well-funded defense
contracts such as the F-35 fighter jet and missile-defense
programs, and a focus on expanding sales opportunities in the
Middle East and Asia, has helped insulate it from the downturn in
military spending on weapons and services. The stock gained more
than 50% last year, aided by an increased dividend and expanded
share-buyback program.
Chief Executive Marillyn Hewson, who took over last January,
said in a statement that the company would continue to focus on
boosting efficiency and cutting costs. Lockheed announced plans in
November to shed 4,000 workers, taking the total number of job
losses over the past five years to 30,000.
The efficiency drive has led to record margins, with all five of
its business units matching or beating their prior-year performance
in 2013, led by gains in its missiles and mission-systems
operations.
The company ended the year with a record backlog of $82.6
billion, up $300 million from a year earlier and $3.9 billion from
the prior quarter. Orders this year are forecast to be between
$41.5 billion and $43 billion.
Net profit of $488 million in the three months to Dec. 31
compared with $569 million a year earlier, with per-share earnings
dipping to $1.50 from $1.73. Operating profit fell 21% to $834
billion.
Lockheed shares closed Wednesday at $156.65, pushing its market
value above $50 billion for the first time at session-end. The
stock is up 5.4% so far this year.
Write to Doug Cameron at doug.cameron@wsj.com
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