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General Dynamics

Cost-Cutting, Buybacks Boost Defense Profits

The biggest U.S. weapons makers posted higher profits this week and raised their forecasts for 2014 earnings, sending shares higher despite cuts in military spending that have weakened revenues.The Dow Jones index that tracks the 10 biggest aerospace and defense companies rose 1.75 percent, driven by gains in shares of Lockheed Martin Corp, General Dynamics Corp, and Northrop Grumman Corp, which all reported higher profit and earnings per share this week.Boeing Co saw a drop in its defense earnings and revenues, but still beat expectations.Weapons makers are benefitting from workforce reductions and other cost-cutting measures that began around 2007, as well as efforts to return cash to shareholders through stock buybacks and strong dividends, said defense consultant Loren Thompson."The gradual decline in military spending has given the companies fewer opportunities to invest in new programs, so theyare returning their cash flow to shareholders," said Thompson, who runs the Virginia-ba...

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