Lockheed Martin Ups its Forecast for 2011

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Lockheed martin released today its financial report for the second quarter of 2011, reporting net sales of $11.6 billion and earning of $742 million, from continuing operations, representing earning per share (EPS) of $2.14. After investing $1 billion in repurchasing 13 million of its stocks in the open market the company has increased its 2011 earnings outlook, with sales and operating profit estimated to hit closer to the upper limit of previous forecasts.

Strong Q2 performance came from aeronautics and electronic systems while information systems and space declined slightly, compared to the same period last year, continuing a similar trend reflected in the ‘Year to date’ (YTD) report. Despite the slight reduction in sales, all segments maintained operating profit growth in the recent quarter and YTD.


Aeronautics Segment

The Aeronautics segment was increased in the recent quarter by $280 million (9 percent) over the quarter from the comparable 2010 period. The increase primarily was due to additional volume from work performed on the F-35 low-rate initial production (LRIP) contracts of approximately $160 million and higher F-16 volume, primarily due to support activities, of approximately $70 million. These increases partially were offset by lower volume of approximately $180 million on the F-22 program, as production continues to wind down with final deliveries expected to be completed in 2012.

Transport aircraft also performed better, increasing C-5 programs in about $100 million, and gains of $80 million due to accelerated deliveries of seven C-130J in the second quarter of 2011 as compared to six in 2010). Operating margin decreased from 11.5% to 11.1% in the first half of the year, as compared to 2010, reflecting the changing life cycle of significant Aeronautics programs. Since the Aeronautics segment sales are driven by a larger share of LRIP activities on the F-35 and C-5 modernization programs, less work is being performed on the mature F-22 program. LRIP contracts typically yield lower margins than mature production programs.

Electronics Segment:

The Electronic Systems segment increased by $221 million or 6 percent for the quarter and $430 million or 6 percent for the first six months of 2011 from the comparable 2010 periods. The programs contributing to this growth were Terminal High Altitude Area Defense (THAAD) and Patriot Advanced Capability-3 (PAC-3) accounting for a $110 million increase, increase in tactical missiles (Hellfire) deliveries worth about $90 million and higher production volume of various radar system worth approximately $135 million.