US defence manufacturers saw sales rise last year, but industry profits were hit by charges against failed diversification efforts. The troubled business aviation market also dragged down results, with no improvement expected this year.
Driving the increase in revenues was the growth in US Department of Defense spending, with prime contract awards up $26.2 billion last year to $170.8 billion. Lockheed Martin held on to the top spot, with $17 billion, but Boeing edged closer at $16.6 billion. Acquisitions lifted Northrop Grumman into third place, at $8.7 billion excluding TRW, ahead of Raytheon and General Dynamics at $7 billion each. But the biggest mover was acquisitive L-3 Communications, which jumped from 29th to 10th place at $1.7 billion.
Lockheed Martin's sales rose 11% to $26.6 billion. Net profit was $500 million, compared with a $1 billion net loss in 2001, after losses on telecommunications ventures, Russian commercial launches and investment in Space Imaging cut earnings by $632 million. The company expects sales to rise by 8-12% this year and 5% in 2004, but profits will be hit by pension expenses.
Northrop Grumman's sales soared 32% to $17.2 billion on its acquisition of shipbuilder Newport News, and the TRW merger will help boost revenues to $25-26 billion this year and $28-29 billion in 2004. The enlarged company expects to outpace the growth in US defence spending by winning bigger contracts. Net income for 2002 was only $64 million, but would have been almost $700 million before accounting charges and losses on discontinued operations.
Raytheon's sales were up 7% at $16.8 billion, with increases in defence revenues offsetting reduced deliveries of business and general aviation aircraft. Even after losses on its discontinued construction business, and writing off its investment in Space Imaging, the company reduced its net loss for the year to $587 million. Raytheon expects sales to increase 6-7% this year on higher defence business.
GD saw sales rise 15% to $13.8 billion, but net earnings dropped slightly to $917 million after a charge to leave the undersea cable-laying business. Gulfstream business jet sales were flat and likely to remain so this year, says GD. L-3's sales were up 71% to $4 billion. Textron saw revenues decline almost 14% to $10 billion and warned of lower sales this year on fewer Cessna business jet deliveries.
Source: Flight International