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First quarter mixed for top defense contractors
Wednesday - 5/23/2012, 2:18pm EDT
Three of the top five U.S. defense vendors — Northrop Grumman Corp., General Dynamics Corp. and Raytheon Co. — had lower sales in the first quarter of 2012, a trend that may continue as the Pentagon cuts its budget.
Lockheed Martin Corp. was the top contractor by defense revenue in fiscal 2011. Boeing Co. was next, followed by General Dynamics, Raytheon and Northrop, according to a Bloomberg Government analysis of federal procurement data.
Northrop, based in Falls Church, Va., had an 8 percent drop in revenue, the largest decrease of the five compared with the same period last year. General Dynamics, based in the same city, was next with a 2.8 percent drop, followed by Raytheon, based in Waltham, Mass., which lost 1.9 percent.
Northrop's quarterly sales dropped to $6.2 billion from $6.7 billion due mainly to lower volume for manned military aircraft, such as the F/A-18, space programs and information systems, according to a press release.
Northrop also reported lower revenue from the F-35 fighter jet program due to an accounting change. The company will now recognize sales as units are delivered instead of as costs are incurred, anticipating a move by Pentagon F-35 buyers away from contracts that reimburse suppliers for their costs.
Radios and Sensors
General Dynamics' decrease resulted from weakness in its tactical communications portfolio, Jay Johnson, chairman and chief executive officer, said in an earnings call. Delayed contract awards for encryption hardware, as well as a slower transition to production of new radios and a communications network for the Army, contributed to the company's lower revenue, Johnson said.
Raytheon attributed its decrease to lower sales on U.S. Army sensor programs in its Network Centric Systems segment, according to a regulatory filing.
Boeing Co., of Chicago, reported an increase of 30 percent in quarterly net sales to $19.4 billion from $14.9 billion, driven by commercial airplane deliveries, according to an April 25 press release.
Boeing got 38 percent of its revenue from the U.S. government in 2011, according to a regulatory filing. The rest of the top five relied on the U.S. government for about 70 percent or more of their 2011 revenue, according to regulatory filings.
(BGov.com is a paid site and requires a subscription for access.)
This story is part of Federal News Radio's daily DoD Report brought to you by United Health Military and Veterans Services. For more defense news, click here.