Lockheed Martin Corp, the Pentagon`s top weapons supplier, on Tuesday forecast 2019 profit below estimates and reported that quarterly margins slipped at the unit that makes the radar-evading F-35 fighter jet and C-130 transport plane.
But Lockheed and other U.S. weapons makers sales are expected to benefit from stronger global demand for fighter jets and munitions and higher U.S. defense budgets in fiscal 2020.
Shares rose 1.5 percent as the company also forecast cash from operations in 2019 at $7.4 billion, higher than its outlook of $7 billion three months ago.
During the quarter, Lockheed`s order backlog grew 19 percent to $130.5 billion from $109 billion.
Operating margins at the aeronautics division, Lockheed`s biggest, fell to 10.6 percent in the fourth quarter from 11.6 percent a year earlier. The company cited lower sales in the C-130 transport aircraft program. Operating margins measure how much profit a company makes on a dollar of sales.
Lockheed expects full-year profit to range between $19.15 and $19.45 per share, below the average analyst estimate of $19.55, according to IBES data from Refinitiv.
U.S. allies showed increased interest in purchasing the F-35 jet during the quarter, which offset some headwinds caused by the C-130 weakness.
Belgium chose to replace its ageing F-16s with F-35s in a $4 billion euro ($4.55 billion) deal in October.
Japan and the United Kingdom both increased their existing orders for the stealth jets.
The company finished the year delivering 91 F-35 jets in 2018, up from 66 jets a year earlier. Lockheed has said it aims to deliver more than 130 F-35s in 2019.
Sales at the company`s missiles and fire control business, which makes PAC-3 missiles for the Patriot missile defense system and the Terminal High Altitude Area Defense system (THAAD), designed to shoot down short-, medium-, and intermediate-range ballistic missiles, rose 22 percent to $2.4 billion during the fourth quarter.
In late November, Saudi Arabia agreed on a $15 billion deal to buy the THAAD system.
The company earned $4.39 per share from continuing operations, just short of estimates of $4.40 per share.
Net sales rose 4.1 percent to $14.41 billion.
During the quarter Lockheed had an effective tax rate of 13.6 percent which gave it a full-year tax rate of 15.5 percent following corporate tax reform in the United States.
Shares rose 1.5 percent at $292.27. The stock tumbled 24 percent in the fourth quarter on fears of slowing global growth.
(This article has not been edited by Zeebiz editorial team and is auto-generated from an agency feed.)
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