Lockheed Martin Corp. reported a better-than-expected quarterly profit on Tuesday and raised its 2019 profit forecast for the second time in three months, helped by increased demand for its stealth F-35 combat jets and missiles.
The company’s shares rose 2.1 per cent in premarket trading. Defence stocks have rallied this year after Washington’s hike in defence spending in the budget proposed late last year.
Lockheed’s better-than-expected results come at a time the United States has decided to remove Turkey from the advanced F-35 jet program, after its purchase of a Russian missile-defence system.
Turkey had been a part of the manufacturing process for the advanced fighter jets, supplying hundreds of items including parts for cockpit display systems and landing gear.
“I don’t anticipate any material, longer-term impact from Turkey’s participation in the F-35 program,” said analyst Joseph DeNardi at Stifel.
“While it may create some nearer-term challenges related to the program’s supply chain, there seems to be very strong international demand from new foreign customers that could backfill Turkey’s orders,” Mr. DeNardi said.
Lockheed’s missiles and fire control unit, which makes missile defences such as the Terminal High Altitude Area Defense (THAAD), was one of its best-performing units where sales grew 15.6 per cent to US$2.41-billion during the reported quarter.
The THAAD system is designed to shoot down short-, medium- and intermediate-range ballistic missiles.
The Pentagon’s No. 1 weapons supplier now expects full-year profit to range between US$20.85 and US$21.15 a share and raised sales estimates to a range of US$58.25-billion to US$59.75-billion.
Sales from its aeronautics business, its largest, rose 4.3 per cent to US$5.55-billion, powered by higher F-35 jets production.
The company delivered 29 F-35 combat aircraft during the quarter, compared with 25 a year ago.
The Bethesda, Md.-based company’s net earnings rose to US$1.42-billion, or US$5 per share, in the second quarter, surpassing analysts’ expectation of US$4.77 a share, according to IBES data from Refinitiv.
Sales grew 8 per cent to US$14.43-billion, above analysts’ expectation of US$14.21-billion.