Defense contractors General Dynamics, Northrop Grumman see profit, revenue

• October 28, 2010
  
  

  By Marjorie Censer, Capital Business
  The Washington Post
  10/27/2010

  Defense contractors General Dynamics and Northrop Grumman on Wednesday
  reported gains in profits and revenue for the third quarter, even as they
  braced for a slowdown in defense spending.

  Falls Church-based General Dynamics said its third-quarter profit jumped
  13.6 percent, to $650 million ($1.70 a share) from $572 million ($1.48) a
  year earlier, spurred by profit increases in both its aerospace and marine
  systems divisions. Revenue increased nearly 4 percent to $8 billion.

  Operating profits grew in three of the company’s four divisions; only its
  combat systems unit experienced a slight drop. The company was buoyed by
  its aerospace unit, which posted a 59.2 percent increase in operating
  earnings.

  Jay L. Johnson, the company’s chief executive, said in a conference call
  with investors that the market for business jets continues to improve and
  that demand remains strong internationally in its aerospace business.

  He also praised the company’s information systems and technology unit,
  which he said has secured thousands of contracts without any single one
  dominating a significant percentage of its sales.

  Johnson said the company has held its own despite efforts to rein in
  defense spending.

  “Is there pressure? Good Lord, yes. Will it tighten? It already is,”
  Johnson said. “But we deal with it day by day, contract by contract,
  platform by platform, system by system.”

  Wes Bush, Northrop Grumman’s chief executive, said in a conference call
  that the company is responding to the budget slowdown by reducing its
  overhead and increasing productivity.

  Next year, “we would expect U.S. defense spending to be
  flat-to-low-single-digit growth,” Bush said. “However, there is more
  revenue uncertainty today [than] we’ve had in the recent past, given the
  budget pressures the U.S. government faces.”

  The Los Angeles-based company, which is preparing to move its headquarters
  to Falls Church, said its third-quarter profit increased to $497 million
  ($1.64 per share), up from $490 million ($1.45) in the comparable period a
  year ago.

  Revenue rose 4.4 percent to $8.7 billion. The company’s technical services
  business posted the largest profit increase, a jump of 37 percent to $56
  million, and its electronic systems unit posted a 21 percent jump to $261
  million.

  Northrop’s shipbuilding business, which the company is considering selling,
  posted an 11 percent decrease.

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