Raytheon Co. (RTN) raised its full-year profit guidance
Thursday, the latest sign of how U.S. defense contractors are
riding out domestic budget uncertainty by cutting costs and
boosting overseas sales.
Three of Raytheon's four segments reported higher margins as the
company's forecast-beating third-quarter performance countered a
drop in revenue from a year ago. The company was led by the success
of its missile-defense unit in winning key contracts from incumbent
operators.
The five largest U.S. contractors all beat profit expectations
in the third quarter, with Raytheon--the No. 4 by
revenue--continuing the pattern set by its larger peers, boosting
productivity on existing deals and winning new business after a
sluggish first half for orders.
Raytheon is an industry bellwether in successfully selling its
knowledge in areas such as missiles and missile defense to non-U.S.
customers, pushing the share of revenue from international sales to
an industry-leading level of more than 30%.
The company's closely watched backlog declined to $32.2 billion
at the end of the quarter and was down 11% year-to-date to lag the
sector, although overseas sales tend to accumulate in the final
quarter of the year. Third-quarter bookings of $5.7 billion lifted
its book-to-bill ratio to 97%, helped by notable wins in new radar
contracts from the U.S. Navy.
Lockheed Martin Corp. (LMT), a longtime leader in naval
electronics, this week lodged a formal protest with the Navy over
Raytheon's latest contract win, forcing its rival to stop work on
the project until an official ruling expected in January.
Raytheon lifted its full-year profit guidance, excluding pension
and tax changes, to $5.67 to $5.77 a share from $5.51 to $5.61 a
share. This is ahead of the $5.65 consensus. The company also
raised the top end of its revenue forecast by $100 million to $23.8
billion. It provided no guidance for 2014.
Raytheon's third-quarter profit fell to $487 million in the
third quarter from $501 million a year earlier, with per-share
earnings flat at $1.51. Per-share earnings from continuing
operations, excluding pension and tax changes, declined to $1.60
from $1.62 but were well ahead of the $1.32 consensus. Revenue fell
to $5.84 billion from $6.04 billion.
Write to Doug Cameron at doug.cameron@wsj.com and Tess Stynes at
tess.stynes@wsj.com
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10-24-13 0705ET
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