US defence, aerospace companies give mixed outlook

2019
US Defence and aerospace companies posted higher-than-expected first-quarter earnings on Thursday, aided by share repurchases and cost controls, but gave a mixed outlook for the year.
Raytheon Co and L-3 Communications Holdings said sales rose and lifted their full-year forecasts. But aircraft parts maker Goodrich Corp said a weaker commercial aerospace market would hurt sales this year.
Reuters adds defence companies have been overshadowed by concerns over the direction of US spending in the wake of recent proposals from the Pentagon that would scale back big weapons programs.
David Wajsgras, Raytheon chief financial officer, said Department of Defence support for Terminal High Altitude Area Defense system and Standard Missile programs boded well for his company.
Raytheon boosted its outlook for full-year sales and earnings yesterday, citing the effect of share repurchases and strength in segments such as technical services and improved margins in network centric systems.
Goodrich, which makes parts for plane makers Boeing Co and EADS unit Airbus, cited weakening worldwide air travel, weaker-than-expected conditions for freight traffic and production cuts in business jets in lowering its sales forecast and the top end of its full-year profit outlook.
“Clearly commercial aerospace end markets are challenged,” Goodrich Chief Executive Marshall Larsen said in a statement.
Still, Goodrich shares rose on stronger-than-expected first-quarter results.
“It is impressive that the company was able to maintain the lower end of EPS guidance (for the year) despite a substantial reduction in the outlook for high-margin aftermarket sales,” JP Morgan analyst Joseph Nadol said in a research note on Goodrich.
Goodrich said it now expects full-year earnings of $4.50 to $4.75 a diluted share, compared with a previous forecast of $4.50 to $4.90 a share. It expects full-year sales of $6.9 billion, below a prior forecast of as much as $7.2 billion.
Raytheon, which supplies Patriot missile defence systems and other military electronics said earnings from continuing operations came to $457 million, or $1.11 a share, for the first quarter, better than the $1 a share expected by analysts, according to Reuters estimates.
 
Raytheon expects full-year sales of $24.4 billion to $24.9 billion, compared to a prior outlook of as much as $24.8 billion. It expects profit from continuing operations of $4.55 to $4.70, up from $4.45 to $4.60 previously.
At L-3, which provides aircraft maintenance, communications systems and government services, net income was $201 million, or $1.66 a diluted share, for the first quarter, better than the $1.63 a share analysts expected on average. Sales rose 4%.
L-3 said it now expects profit of $7.17 to $7.32 a share for this year, compared with its January view of $7.12 to $7.32.
Adjusted for items, Goodrich had first-quarter net of $1.32 a share, compared with $1.07 expected by analysts.
Raytheon shares were up $1.46 to $42.76 and Goodrich rose $2.13 to $43.96. L-3 shares were down $1.15 to $72.75.