Lockheed Martin Sets Modest Sales Expectations -- Update
October 20 2020 - 4:46PM
Dow Jones News
By Doug Cameron
Lockheed Martin Corp. said it expects to deliver the first new
presidential helicopter next year as part of a $5 billion refresh
of the White House fleet, part of a modest rise in military
spending that the company anticipates in coming years.
The helicopter is being built by the company's Sikorsky arm,
which has emerged as a key growth driver for Lockheed Martin. The
company on Tuesday forecast that sales would rise by just 3% next
year as federal budget pressures weigh on domestic military
spending.
The defense industry has been one of the U.S. economy's most
resilient sectors during the pandemic, with its designation as an
essential industry allowing plants to avoid shelter-in-place
orders. The Pentagon also has accelerated contract payments to help
the sector's smaller suppliers.
But the U.S. defense budget is forecast by analysts to grow in
the low-single digits over the next several years, effectively
shrinking slightly in real terms, with a rising federal deficit
from spending to tackle the coronavirus pandemic hitting investment
in military spending.
Lockheed Martin is building 23 helicopters for the Marine Corps
to transport the president, vice president, cabinet members and
other dignitaries. A previous effort to replace "Marine One" -- so
designated when the president is on board -- was abandoned in 2009
after costs doubled.
Ken Possenriede, Lockheed Martin's chief financial officer, said
in an interview that operational testing of the VH-92A helicopters
was close to completion. The program has remained broadly on time
and on budget despite issues including its communications system
and scorching of the White House lawn during evaluation
flights.
The Navy is due to decide in January when the helicopters can
become part of the presidential helicopter fleet, according to the
Government Accountability Office. The Pentagon didn't immediately
respond to a request to comment.
Mr. Possenriede said earlier this year that he expects
Sikorsky's sales to double over the next decade, helped by big
contracts for the Navy and the U.S. Air Force, as well as overseas
sales.
Lockheed Martin provided a look at the impact of slowing
military budget growth as it reported forecast-beating quarterly
profits and initial 2021 guidance. The company said it expects
sales to be at or above $67 billion in 2021, below analysts'
expectations, even as its order backlog climbed to a record $150
billion at the end of the quarter.
Its shares fell about 2.5%.
Lockheed Martin's third-quarter profit rose to $1.7 billion,
from $1.6 billion a year earlier, and per-share earnings climbed to
$6.25 from $5.70. Sales rose to $16.5 billion from $15.2
billion.
Write to Doug Cameron at doug.cameron@wsj.com
(END) Dow Jones Newswires
October 20, 2020 16:31 ET (20:31 GMT)
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