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Northrop Profit Dips Slightly but Beats Forecasts

Earnings: Defense firm says declining weapons sales are to blame. At General Dynamics, profit is up 22%.

April 22, 1999|From Times Wire Services

Northrop Grumman Corp. said Wednesday that its first-quarter profit fell slightly on slumping sales of B-2 bombers and other weapons, but still exceeded Wall Street forecasts.

Profit from operations fell to $104 million, or $1.50 a share, from $105 million, or $1.52, a year earlier. The results beat the $1.33 average estimate of analysts polled by First Call Corp. Sales rose 4.2% to $2.1 billion.

Growth in Northrop's Logicon information technology unit helped offset declines in airplane production, Northrop said. Sales at Logicon, which, among other things, helps the Pentagon evaluate military contracts, soared 53% to $359 million.

Airplane production was affected by a drop in B-2 sales and a decline in sales to Boeing Co.'s commercial airplane division.

It was the second consecutive quarter of declining profit for Los Angeles-based Northrop, a major supplier of commercial airplane parts, radar and air defense systems. Almost a year after the Pentagon blocked Lockheed Martin Corp.'s attempt to buy the company, Northrop is struggling with engineering problems in key programs and declining overseas sales. Its stock has lost more than a third of its value since the sale was rejected.

Northrop, the fifth-biggest U.S. defense contractor, benefited from an increase in income derived from investments in its pension plan. Pension income rose 28% to $83 million. Full-year pension income is expected to increase by $68 million, the company said.

Northrop shares rose 19 cents to close at $64.81 on the New York Stock Exchange.

Separately, General Dynamics Corp. said its first-quarter operating profit rose 22% to $100 million, or 78 cents a share, beating the 72-cent average estimate of analysts surveyed by First Call Corp. Revenue grew 19% to $1.38 billion, with a big boost from the company's marine division, which makes submarines and destroyer ships.

General Dynamics, the fourth-largest U.S. defense contractor, said profit in the marine unit grew 38% as sales climbed 46%. Strength in the unit came from the purchase of Nassco Holdings Inc. in October and by construction of the new U.S. attack submarine Virginia and the design of the next-generation destroyer, the DD-21.

At the combat systems division, which makes the M-1A2 Abrams tank and other armored vehicles, profit fell 19% to $290 million, reflecting the end of the Single Channel Ground and Airborne Radio Systems, or Sincgars, a production program for the Army.

Profit in the information systems and technology unit jumped 43% on a 6.9% increase in sales.

Falls Church, Va.-based General Dynamics ended the quarter with a funded backlog of orders of $8 billion and a total backlog of $14.2 billion, compared with $7.2 billion and $11.2 billion a year earlier.

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