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F-35 fuselage production raises Northrop’s sales

Northrop Grumman’s Aerospace Systems sector, including its F-35 fuselage production line and restricted programmes, such as the B-21 stealth bomber, helped push the company’s second quarter sales higher, despite mixed results in its other business units.

Overall, the company’s sales rose 10% to $7.1 billion, from $6.5 billion, for the three months ended 30 June 2018, according to the firm's quarterly filing with the Securities and Exchange Commission.

The company entered full-rate production on the Lockheed Martin F-35 Lightning II’s centre fuselage at its Palmdale, California facility in May in order to meet increasing order quantities from the Pentagon and international customers. The manufacturer projects that it will complete 113 fuselages this year and it aims to produce 153 fuselages in 2019 – with the facility producing a fuselage every 1.25 days during peak production.

At the same Palmdale facility, the company is also working on producing the B-21 heavy stealth bomber, which finished its preliminary design review in April. The USAF plans to buy 100 B-21s, enough to retire by 2040 its fleet of 20 Northrop B-2 Spirit stealth bombers and 62 Boeing B-1B Lancer bombers.

Aerospace Systems sector sales for the three months ended 30 June 2018 increased $334 million, or 11%, as compared with the same period in 2017, according to Northrop Grumman.

By contrast, sales for its Mission Systems sector, which includes sensors and processing, cybersecurity services, and intelligence, surveillance and reconnaissance products, increased $15 million, or just 1% for the quarter. Sensors and processing sales increased mainly due to higher volume on restricted programs, the Scalable Agile Beam Radar programme and electronics on the F-35.

Sales for Technology Services, which includes logistics support for the KC-10 aerial refueling tanker and the Joint National Integration Center Research and Development Contract (JRDC), decreased $114 million, or 10%. The company’s JRDC and KC-10 programmes had lower revenue as the contracts near completion. Boeing’s KC-46 aerial tankers begin deliveries this October.

The company also generated an additional $400 million in revenue from its newest business sector, Innovation Systems, which was formerly Orbital ATK before being acquired in June 2018 for $9.2 billion.

The recent integration of Orbital ATK into Northrop Grumman offers the company the opportunity to move its business into new areas, said Kathy Warden, Northrop president and chief operating officer, who is to assume the role of CEO on 1 January 2019.

“Hypersonics, this expands Northrop’s portfolio, which has typically been more in the counter-hypersonics market, to also be able to add value in the weapons systems themselves as well,” she said.

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