Kevin O'Toole/LONDON

LOCKHEED MARTIN has ended its first year with profits of more than $1 billion, confirming Wall Street optimism that consolidation within the defence giant is already producing the promised post-merger benefits.

"We are meeting, and in some cases exceeding, the consolidation schedule we announced in June 1995," says President Norman Augustine. He points out that since the merger, which was sealed in March, the enlarged group's stock value has risen by 75%.

Augustine predicts a continued improvement in results as the merger benefits continue to feed through, with the acquisition of Loral also bringing profits.

Net profits of $1.1 billion represent a 17% improvement for the group, despite the fact that turnover remained virtually unchanged at just below $23 billion. The headline profit excludes $690 million in one-time costs of the merger and ensuing consolidation. The group also delivered on promises of increased cash flow, with around $880 million in free cash, at the years end.

The biggest profit gains came from the space and strategic missiles segment of the business, where operating profits rose by 46% as sales grew by 12% to above $7.5 billion, making it now the group's largest single division.

The aeronautics division managed to improve margins slightly, despite a dip in sales to $6.6 billion. The group delivered 75 F-16 fighters during the year and has a firm backlog of 412 aircraft scheduled for delivery by the end of the decade.

Source: Flight International