Lockheed Martin said Thursday that its fourth-quarter profit plunged 14 percent as federal budget cuts sapped sales and led to a goodwill write-down and job reduction charge.
Net income from continuing operations fell to $488 million, or $1.50 a share, from $569 million, or $1.73 a share, a year earlier, the Maryland-based company said. Earnings adjusted for one-time charges were $2.38 a share, beating the $2.11 estimate from five analysts surveyed by Bloomberg.
Sales declined 4.7 percent to $11.5 billion in the quarter, with decreases across all five units, including the Fort Worth-based aeronautics division, which suffered from fewer deliveries of C-130 cargo aircraft.
Bruce Tanner, Lockheed’s chief financial officer, said he hopes that this year will be “a trough” in U.S. defense spending, with future budgets increasing. “We’re hopeful 2014 is the bottoming-out,” he said on a conference call with reporters.
Sales and profit in the aeronautics division, Lockheed’s biggest business segment, each declined in the fourth quarter. Net sales were off 6 percent at $3.9 billion as the company recorded $190 million less in C-130 sales and fewer aircraft deliveries.
Operating profits were down 7 percent to $414 million. For the full year, the aeronautics unit earned $1.61 billion, down from $1.7 billion in 2012, as sales declined 5 percent to $14.1 billion.
The F-35 fighter jet, made in west Fort Worth, is Lockheed’s largest program and generated 16 percent of sales in 2013, Tanner told reporters.
“That number will grow in 2014,” he said. It accounted for 14 percent of Lockheed’s sales in 2012, according to a regulatory filing.
The Pentagon has buffered high-priority weapons systems, including the F-35, from the government’s automatic spending reductions, known as sequestration.
The recently approved $1.1 trillion spending bill for the current fiscal year funds all 29 F-35 aircraft that the Defense Department had requested, as well as the start of advance hardware purchases for 39 of the 42 jets on the military’s wish list for the year that will begin Oct. 1.
Special charges contributed to the drop in fourth-quarter profit, including $171 million for workforce reductions and a $195 million goodwill write-down tied to Lockheed’s Missiles and Fire Control unit, based in Grand Prairie.
In November, Lockheed announced that it would eliminate 4,000 jobs and close some operations in response to slow spending by U.S. agencies. The job cuts did not affect workers in North Texas, where Lockheed employs more than 14,000 in west Fort Worth and 2,700 in Grand Prairie.
Lockheed estimated that its 2014 profit from continuing operations will be $10.25 to $10.55 a share on sales of $44 billion to $45.5 billion. The average estimate of 20 analysts surveyed by Bloomberg was $10.29 a share, with a sales projection of $44.2 billion.