U.S. weapons maker Raytheon Co reported higher-than-expected second-quarter earnings and raised its forecast for full-year profit despite a drop in revenues, following the lead of other top U.S. defense contractors.
Raytheon, which just won a $925 million contract for a joint U.S.-Japanese missile program, said income from continuing operations rose 10 percent to $472 million in the quarter, with earnings per share from continuing operations rising 18 percent to $1.41 from $1.20 a year ago. Analysts polled by Thomson Reuters I/B/E/S estimated $1.22.
Raytheon Chief Executive William Swanson said the solid results were driven by strong execution across the company, operational improvements and share buybacks, Reuters reports.
Raytheon, which celebrates its 90th anniversary this month, raised its forecast for earnings per share from continuing operations by 15 cents to $5.15-$5.30 from an earlier forecast of $5.00-$5.15.
Raytheon raised its forecast for cash flow from operations by $100 million to $1.7 billion to $1.9 billion, despite a net outflow of $259 million in the second quarter attributed to the “timing of collections.”
It reported a net outflow of cash of $89 million in the year-earlier period.
Operating margins rose to 12.4 percent for the quarter, up from 10.8 percent a year earlier.
Sales dipped 3 percent to $5.99 billion in the second quarter, depressed by a 15 percent drop in revenues from its network centric systems division, as sales to the U.S. Army declined. That fell just short of the $6.02 billion expected by analysts.
The division also posted a 28 percent drop in operating income, citing a change in contract mix and lower volume.
Bookings fell 17 percent to $6.16 billion in the second quarter from $7.42 billion in the same quarter of 2011. Year to date, bookings totaled $11.32 billion, nearly 10 percent less than at the same point last year, when bookings were $12.52 billion.
The company’s backlog was also down, totaling $33.92 billion at the end of the second quarter, down from $34.48 billion at the same point in 2011.
Raytheon’s results beat analyst estimates, but were largely in line with results from Lockheed Martin Corp, Northrop Grumman Corp and other big weapons makers this week.
Uncertainty about the U.S. defense budget — and whether an additional $500 billion in cuts will take effect as scheduled in January — appears to be slowing some order activity by the federal government, even on already-awarded contracts.