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— Defense contractor Northrop Grumman Corp. said on Wednesday that its third-quarter profit edged up on contributions from its aerospace, electronics and technology businesses, and boosted its earnings guidance for the year.
Shipbuilding was the only operating segment where profit dropped in the latest quarter.
Defense companies are under pressure to cut costs from the Pentagon and other weapons buyers. That has forced most of them to shrink, and Northrop is looking at selling or spinning off the shipbuilding unit, although it hasn't made a decision yet.
The company expects U.S. Defense Department spending to be flat or up slightly next year, "however there is more revenue uncertainty today than we've had in the recent past, given the budget pressures the U.S. government faces," President and CEO Wes Bush said.
The Los Angeles company reported net income of $497 million, or $1.67 per share, for the quarter that ended Sept. 30. That's up from $490 million, or $1.53 per share, a year ago, when a tax benefit boosted earnings by $75 million, or 23 cents per share.
Revenue rose to $8.7 billion from $8.35 billion a year ago.
Analysts surveyed by Thomson Reuters expected earnings of $1.46 per share on revenue of $8.56 billion.
Northrop Grumman raised its full-year earnings guidance to $6.85 to $7 per share. Previously it expected $6.60 to $6.80 per share. It also said it expects revenue of $34.9 billion, up $100 million from previous guidance. Analysts expected earnings of $6.86 per share for the year, with revenue of $34.84 billion.
Aerospace is the company's biggest unit, making the B-2 stealth bomber, drone aircraft, and satellites. Aerospace operating income rose 14 percent to $303 million, with revenue up 7 percent to $2.71 billion. The company made more manned and unmanned aircraft, which made up for lower volumes for civilian space and missile defense programs.
Bush said its Global Hawk unmanned reconnaissance plane has flown 35,000 combat hours, and the company expects a decision in the spring on moving to full production rates.
Operating profits for its electronic systems unit rose 21 percent to $261 million. Revenue rose 2 percent to $1.87 billion on higher sales of targeting and postal automation systems.
Profits from shipbuilding fell 11 percent to $101 million.
It accelerated about $500 million of pension contributions into the second half of 2010, and might make a large contribution in the first part of 2011, said Jim Palmer, the company's chief financial officer.
Its shares rose 3 cents to $61.38 in midday trading.
