Lockheed Martin reports lower first-quarter profit following job cuts

Lockheed Martin raised its annual profit forecast as the company works to lower costs and bolster profit at the division that manufactures the F-35 fighter jet and other military aircraft amid constrained defense spending.

Earnings will be $11.50 to $11.80 a share in 2016, compared with the $11.45 to $11.75 range forecast in January, Lockheed said in a statement Tuesday. The company raised its forecast for sales to between $49.6 billion and $51.1 billion from a range of $49.5 billion and $51 billion.

The positive outlook came as the nation’s largest defense contractor reported lower earnings for the first quarter due to costs of job cuts at the Fort Worth-based aeronautics unit. Lockheed, based in Bethesda, Maryland, said net income was $794 million, or $2.58 per share, compared to $878 million, or $2.74 per share, in the first quarter of 2015.

Lockheed said last month it was culling about 1,000 jobs from the aeronautics unit, its largest division and the source of about one-third of revenue. Costs for job cuts decreased first-quarter earnings by $64 million, or 21 cents a share.

Profit margins have been squeezed as the company resolved technical issues that delayed the F-35, the Pentagon’s most expensive weapons system, and worked to expand and renovate its mile-long assembly plant in west Fort Worth to handle increased production. The company plans to deliver 53 of the advanced stealth fighter jets this year, doubling output to about 100 by 20 18.

“Profitability is improving and presumably would continue to improve as they work through the learning curve,” said Douglas Rothacker, a defense analyst with Bloomberg Intelligence, in an interview before the results were announced.

First-quarter earnings, excluding a one-time accounting loss of $2.79 a share, exceeded the $2.60 average of 17 analysts’ estimates compiled by Bloomberg. Revenue of $11.7 billion exceeded the $11.4 billion analysts anticipated.

Lockheed Martin’s Chief Executive Officer Marillyn Hewson is set to discuss results and provide an update on a planned spinoff of the company’s information technology and services division to Leidos Holdings Inc. during a conference call with analysts at 11 a.m. in New York.

This story was originally published April 26, 2016 at 8:21 AM with the headline "Lockheed Martin reports lower first-quarter profit following job cuts."