Daily Management Review

F-35, Lower Tax Rate Boosts Lockheed Martin Profit By 17 Pct In Q3


10/24/2018




F-35, Lower Tax Rate Boosts Lockheed Martin Profit By 17 Pct In Q3
Lower tax rates because of the corporate tax cuts announced by United States president Donald Trump and a higher production of its F-35 fighter jets helped Lockheed Martin Corp to beat Wall Street estimates for third quarter profits noting a 17 per cent year-on-year increase. Lockheed is the largest weapons supplier for the Pentagon. The sale forecast of the company for next year would also be more than the Wall Street estimates, it claimed.
 
The bottom line of the firm was helped by the reduced tax rate of 6.5 percent in the third quarter and was also aided by $1.5 billion contribution to its pension plan. The tax rate before the cuts was 25.8 per cent for Lockheed. The tax cuts became applicable after the third quarter of 2017.
 
The company said that of funding by the US government continued for some of its "key programs" such as the F-35 fighter jet, designed to avoid detection, here would be a potential increase in sale between 5 and 6 per cent for 2019 compared to figures of 2018.
 
The sale predictions of the company for 2019 would peg its revenues in the range between $55.6 billion to $56.2 billion, which is just over expert expectation of about $55.4 billion in the same period.
 
The company also noted an increase in net income for the period at $1.47 billion, or $5.14 per share compared to $963 million, or $3.32 per share for the same period a year ago. Net sales rose to $14.31 billion from $12.34 billion a year earlier.
 
"Our team achieved another quarter of strong growth leading us to improve our expectations for our full-year financial results," said Lockheed Martin Chairman, President and CEO Marillyn Hewson. "As we look ahead to 2019, we remain focused on providing innovative, essential solutions to customers, and continuing to generate growth and long-term value for shareholders."
 
According to Refinitiv estimates, adjusted profit of $4.31 per share on revenue of $13.07 billion was what analysts were expecting while Lockheed's EPS came at $5.14.
 
Strong profit margins were reported by the stealthy F-35 fighter jet program of Lockheed, said Joseph DeNardi, an analyst at Stifel. During the quarter, there was increase in the volume of production as well as payments for maintenance for F-35.
 
The Rotary and Mission Systems business unit of the company also strongly supported the margins for the Lockheed. This business unit manufactures ships and helicopters. Riding partly on strong margins from missile launch systems sales, this unit saw an increase in operating profit of 40 per cent compared to the same period a year ago.
 
There was also an increase in the order backlog during the third quarter compared to the quarter earlier for the Bethesda, Maryland-based company at $109 billion against $105 billion.
 
The company's tax rate for 2018 would be in the mid-14 percent range following, Lockheed Chief Financial Officer Bruce Tanner had told analysts during a conference call in July.
 
(Source:www.penewswire.com & www.nasdaq.com)






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