Defense contractor Northrop Grumman Corp. said second-quarter profit rose despite a sales drop, aided by a tax credit and reduced costs. The Virginia company further lifted its earnings forecast for the year, thanks partly to a lower projected tax rate. Northrop now expects to report $9.55 to $9.70 in per-share profit in fiscal 2015, up from an earlier range of $9.40 to $9.60. The firm backed its revenue guidance of $23.4 billion to $23.8 billion and said its outlook assumes no disruption or shutdown of government operations resulting from a federal government debt ceiling breach. The government will need to next boost the ceiling later this year. Northrop Grumman generates about 84% of its revenue from the U.S. government. Like its rivals, the company is seeking to boost sales abroad amid lackluster military spending at home. Northrop Chief Executive Wes Bush has said the firm's international sales—which rose 20% last year—are set to account for 15% of revenue in 2015, with South Korea and Japan lined up to buy its high-end military drones. In the latest period, higher volume for unmanned programs drove a slight increase in aerospace systems sales. The segment—Northrop's largest—accounts for over 40% of total revenue and posted $2.51 billion in revenue. Analysts polled by FactSet expected $2.49 billion. International sales helped offset lower volume for some programs in Northrop's technical services business, where sales fell 1.6%. The electronic systems business, which sells space sensors and marine systems, reported a 3.5% sales decline to $1.68 billion, short of analysts' expectations. Revenue from information systems, meanwhile, slid a worse-than-expected 4.9% to $1.49 billion due mostly to declines in command-and-control programs and the impact of in-theater force reductions. In all, the contractor reported a profit of $531 million, or $2.74 a share, up from $511 million, or $2.37 a share, a year earlier. The result includes a tax benefit of 20 cents per share and benefited from a lower share count. Revenue dropped 2.4% to $5.9 billion. Analysts predicted $2.36 in per-share profit and $5.93 billion in revenue, according to Thomson Reuters. Total backlog as of June 30 was $37 billion, down from $38.2 billion at the end of December. New awards in the quarter totaled $4.6 billion. Expenses declined 2.6%.
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