Lockheed Martin Corp., the biggest U.S. military contractor, said Tuesday that first-quarter profit climbed 16%, buoyed by spending on Patriot missiles used in Iraq and funding to develop new jets.
The company raised its 2004 forecasts.
Net income rose to $291 million, or 65 cents a share, from $250 million, or 55 cents, a year earlier, the Bethesda, Md.-based company said. Sales rose 18% to $8.35 billion.
Some of the Pentagon's biggest weapons programs, including Lockheed's Joint Strike Fighter, are benefiting as President Bush seeks to boost the defense budget.
Defense spending, which has risen for the last six years, accounts for almost 20% of Bush's proposed fiscal 2005 budget, compared with an average of 17% under Bill Clinton.
Lockheed was expected to earn 53 cents in the quarter on sales of $7.73 billion, the average estimate of 14 analysts surveyed by Thomson First Call.
The company expects 2004 profit of as much as $2.60 a share, up from a January forecast of as much as $2.50 and profit of $2.34 last year.
Lockheed's largest business, aeronautics, boosted sales 38% to $2.87 billion as development work on the Joint Strike Fighter doubled and overseas sales of F-16s rose by 50%, Chief Financial Officer Christopher Kubasik said.
Shares of Lockheed rose 38 cents to $46.88 on the New York Stock Exchange. They have fallen 8.8% this year on concern that the rising cost of the war in Iraq could lead to spending cutbacks on Lockheed's large fighter-jet programs.
Lockheed is working to develop jets such as the Joint Strike Fighter and F/A-22 that will replace older aircraft. Aeronautics profit climbed 42% to $206 million in the quarter, and will rise about 25% to as much as $860 million for the year, Kubasik said.
Aeronautics also received a lift as the C-130J transport-plane program returned to profitability last quarter for the first time in five years, Kubasik said. Profit margins on the planes were in the "mid-single digits" in the quarter and should rise to 10% by the fourth quarter, he said.
Lockheed's F/A-22 fighter program has made "significant progress" toward improving the stability of the jet's avionics software in the last year, Kubasik said. The firm expects to get the formal contract for the next group of 22 F/A-22 jets by the end of June. A preliminary agreement for the order, expected to be worth more than $2 billion, was announced in March.
Lockheed boosted its 2004 forecast for sales to as much as $34.8 billion, from $34.5 billion, and for cash flow from operations to about $2.4 billion, from as much as $2 billion.
As a result of the conflict in Iraq, Lockheed could see some additional demand from the U.S. Army for the firm's multiple launch rocket system, or for intelligence, surveillance and reconnaissance gear, Kubasik said.
Lockheed and Raytheon Co. received a $505-million order in February for 159 Patriot Advanced Capability-3 missiles, of which 22 would replace ones deployed in Iraq last year.