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Lockheed Posts Soaring Profit

April 24, 2002|From Bloomberg News

Lockheed Martin Corp., the world's largest defense contractor, said first-quarter profit more than doubled because of increased sales of fighter aircraft and military cargo planes.

Net income rose to $218 million, or 49 cents a share, from $105 million, or 25 cents, a year earlier. Sales rose 26% to $5.97 billion from $4.75 billion, the company said.

Lockheed delivered two C-130J transport planes in the quarter, versus none a year earlier, and increased development work for international sales of the F-16 fighter jet, which is being used in Afghanistan. It also began work on the $200-billion Joint Strike Fighter. Shares of Lockheed have risen 80% in the last year as U.S. defense spending has grown.

"This is a good, solid company with the wind at their back," said Adam Friedman, asset manager for National City Investment Management.

Lockheed reaffirmed its full-year earnings forecast of $2.45 to $2.50 a share and said 2003 profit should be 10% above 2002 earnings on higher sales of aircraft, missiles and government services. It sees free cash flow of at least $1billion in 2002.

Shares of Lockheed on Tuesday rose $3.08 to $62.20 on the New York Stock Exchange. They have risen 42% since September's terrorist attacks.

"This is the safest company by far in defense," said Erik Becker, an analyst with Waddell & Reed, which manages $30 billion in assets, including 9.5 million shares of Lockheed.

Standard & Poor's Corp. last week raised its ratings on $7.5 billion in Lockheed bonds because of the company's improved finances and debt reduction.

Bethesda, Md.-based Lockheed was expected to earn 47 cents a share in the first quarter, the average estimate of analysts surveyed by Thomson Financial/First Call.

Sales at Lockheed's military-aircraft unit rose 56% to $1.3 billion. Profit before interest and taxes rose 23% to $107 million, helping to more than offset a 38% decline in profit at its Space Systems unit.

That business still operated at a loss, though the loss has fallen from a year ago, Chief Financial Officer Christopher Kubasik said.

Lockheed also is making progress toward ending a strike by 2,600 machinists at its Georgia aircraft plant, Kubasik said.

Union spokesman Bob Wood said he wasn't aware if progress had been made in talks with Lockheed.

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