Lockheed Martin said today its first-quarter profit jumped 23 percent, topping analysts’ estimates even as federal budget cuts sapped sales.
The maker of the F-35 fighter jet, built in west Fort Worth, said net income from continuing operations rose to $933 million, or $2.87 a share, from $761 million, or $2.33 a share, a year earlier. That was higher than the $2.53-a-share estimate of 21 analysts surveyed by Bloomberg News.
Lockheed also boosted its full-year profit outlook. It now anticipates a profit from continuing operations of $10.50 to $10.80 a share, compared with $10.25 to $10.55 forecast in January. The contractor affirmed its earlier estimate of $44 billion to $45.5 billion in sales for 2014.
While sales declined 3.8 percent in the quarter to $10.7 billion, the Bethesda, Md.-based defense contractor had higher profits in four of its five segments in the first quarter. Operating profit at its largest division, the Fort Worth-based aeronautics iunit, rose 3.7 percent, aided by the F-35 fighter jet and C-130 transport aircraft programs.
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The F-35 has become the company’s largest program, accounting for 16 percent of Lockheed’s sales in 2013, up from 14 percent a year earlier, according to regulatory filings. The company said in the filings it expected that share to increase.
The aeronautics division was the only Lockheed segment with an increase in sales. It reported $3.39 billion in revenue in the first quarter, a 6.3 percent boost from a year earlier.
While Pentagon officials have said they will do their best to shield the F-35 from budget cuts, they outlined the limits of that protection in a report this month. The report said the Defense Department would be forced to cut 17 of the 343 fighters it plans to buy from fiscal 2016 through 2019 unless Congress repeals automatic federal spending cuts imposed under a process known as sequestration.
Lockheed’s quarterly profit was helped by pension income of $86 million, which increased earnings by 16 cents a share in the quarter. A year earlier, Lockheed faced pension expenses of $121 million, reducing earnings by 23 cents a share.
The company said it spent $1.1 billion buying back 7 million shares, more than double the $461 million it spent on such repurchases in the first quarter of 2013, and increased its dividend payout to $444 million from $371 million.
In November, Lockheed announced it would cut 4,000 jobs and close some operations.
Lockheed is the first of the leading U.S. defense companies to report results for the quarter. Many military contractors’ sales are shrinking as the government slows spending and winds down the war in Afghanistan.
Federal budget reductions last year contributed to the fourth consecutive annual decline in government contracting, the longest stretch since Ronald Reagan was president.
In January, President Barack Obama signed a $1.1 trillion spending bill to fund the government through Sept. 30 and alleviate some of the cuts due to take effect under sequestration.