Lockheed Martin said Tuesday that it expected sales to grow around 2% next year, driven heavily by its flagship F-35 Joint Strike Fighter combat plane, as it reported quarterly earnings that fell just shy of expectations.
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The world's largest defense company by revenue provided the first insight into industry trends for next year as it left 2017 guidance unchanged beyond a one-off gain from property sales.
Lockheed said its forecast for 2% sales growth in 2018, or around $1 billion, reflects also an adjustment from the adoption of new accounting standards coming into effect Jan. 1.
Revenue at the aeronautics unit, its largest, should advance in high single digits, Lockheed Martin Chief Financial Officer Bruce Tanner said. Higher sales of the F-35 to the Pentagon and foreign operators would help offset lower deliveries on other planes, including the F-16 combat jet and the giant C-5 transport plane.
Sales for the space unit that makes military and commercial satellites will likely dip next year, he said.
Lockheed Martin recently secured some high profile, big ticket overseas deals, including to provide Thaad missile defense systems to Saudi Arabia and more F-16 jets to Bahrain. Revenue from those deals will be slow to arrive, though, and likely have little impact on 2018 results.
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The company also said that a continuing budget stalemate in Washington could threaten its outlook. Pentagon spending for the fiscal year that began Oct. 1 has been constrained because Congress hasn't passed a new budget.
If that persists it could impact orders, Chief Executive Marillyn Hewson said. But she told analysts she was "pretty optimistic that it is not going to do that."
Lockheed reported profit of $939 million for the September quarter compared with the $2.4 billion year-ago result lifted by one-off gains. Per-share earnings fell to $3.24 from $7.93, 2 cents below the consensus among analysts polled by Thomson Reuters. Mr. Tanner said the timing issues would be more than offset in the final three months of the year.
The weapons maker lifted its full-year sales guidance to a range of $50 billion to $51 billion, driven by the $200 million property gain, and left other key metrics unchanged.
Mr. Tanner said the backlog of orders also topped $100 billion for the first time.
Lockheed shares were 3% lower in midday trading. The stock is up more than 24% this year.
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(END) Dow Jones Newswires
October 24, 2017 12:42 ET (16:42 GMT)