The US group fell short of expectations with its results for the past quarter and recorded significant charges for various programs. The management is becoming more cautious for the year as a whole. On the stock market, the shares fall noticeably.
The aerospace company performed worse than expected in the past quarter. In the three months, Lockheed Martin achieved a turnover of around 18.15 billion dollars, an increase of only 0.2 percent compared to the same quarter last year. On average, analysts had expected at least an increase to 18.5 billion dollars.
In addition, this time there was significantly less left over than a year ago: operating profit shrank by around 65 percent to 748 million dollars. At the bottom line, net profit slumped from 1.6 billion dollars to 342 million dollars this time.
Burdened by expenses
This was primarily due to expenses of 1.6 billion dollars that the Group incurred for various of its programs. "Our ongoing program review process has identified new developments that have led us to reassess the financial position of a number of key existing programs. As a result, we are taking a number of actions this quarter to address these newly identified risks," explained Group CEO Tim Taiclet.
The largest part of this related to a program in the Aeronautics division. This includes, for example, the C-130 transport aircraft and the F-35 stealth jet. Primarily due to "design, integration and testing challenges" as well as updated time and cost estimates, Lockheed reported additional pre-tax losses of 950 million dollars in the past quarter.
Additional charges were incurred on programs in the Sikorsky division, which manufactures helicopters and drones. In addition to the expenses for programs, there were also 169 million dollars in other charges.
Annual targets lowered
At the bottom line, these factors were reflected in the figures: earnings per share fell from 6.85 dollars in the previous year to 1.46 dollars. In addition, free cash flow was negative this time. The order backlog amounted to 166.5 billion dollars at the end of June.
The recent performance is now also having an impact on planning for the year as a whole: However, the management is sticking to its sales targets; after 71 billion in the past year, it is still aiming for 73.75 to 74.75 billion dollars. However, the management is now more skeptical about the operating result and net profit. The latter is now expected to be between 21.70 and 22.00 dollars per share, whereas previously Lockheed was confident of up to 27.30 dollars per share.
Share price flies lower
The figures and outlook put the stock market in a bad mood. The shares lost more than seven percent. The strong performance of many defense stocks has also passed the shares by in recent months: since the beginning of the year, the share price has fallen by around 15 percent. Apart from a breakout around a year ago, the shares have largely moved sideways for more than three years.
The fact that a competitor, Northrop Grumman, has today raised its profit targets for the year is also unlikely to cause much enthusiasm among Lockheed shareholders.
