By Lisa Beilfuss
Defense contractor Northrop Grumman Corp. said second-quarter
profit rose despite a sales drop, aided by a tax credit and reduced
costs.
The Virginia company further lifted its earnings forecast for
the year, thanks partly to a lower projected tax rate. Northrop now
expects to report $9.55 to $9.70 in per-share profit in fiscal
2015, up from an earlier range of $9.40 to $9.60. The firm backed
its revenue guidance of $23.4 billion to $23.8 billion and said its
outlook assumes no disruption or shutdown of government operations
resulting from a federal government debt ceiling breach. The
government will need to next boost the ceiling later this year.
Northrop Grumman generates about 84% of its revenue from the
U.S. government. Like its rivals, the company is seeking to boost
sales abroad amid lackluster military spending at home. Northrop
Chief Executive Wes Bush has said the firm's international
sales--which rose 20% last year--are set to account for 15% of
revenue in 2015, with South Korea and Japan lined up to buy its
high-end military drones.
In the latest period, higher volume for unmanned programs drove
a slight increase in aerospace systems sales. The
segment--Northrop's largest--accounts for over 40% of total revenue
and posted $2.51 billion in revenue. Analysts polled by FactSet
expected $2.49 billion.
International sales helped offset lower volume for some programs
in Northrop's technical services business, where sales fell 1.6%.
The electronic systems business, which sells space sensors and
marine systems, reported a 3.5% sales decline to $1.68 billion,
short of analysts' expectations.
Revenue from information systems, meanwhile, slid a
worse-than-expected 4.9% to $1.49 billion due mostly to declines in
command-and-control programs and the impact of in-theater force
reductions.
In all, the contractor reported a profit of $531 million, or
$2.74 a share, up from $511 million, or $2.37 a share, a year
earlier. The result includes a tax benefit of 20 cents per share
and benefited from a lower share count.
Revenue dropped 2.4% to $5.9 billion.
Analysts predicted $2.36 in per-share profit and $5.93 billion
in revenue, according to Thomson Reuters.
Total backlog as of June 30 was $37 billion, down from $38.2
billion at the end of December. New awards in the quarter totaled
$4.6 billion.
Expenses declined 2.6%.
Write to Lisa Beilfuss at lisa.beilfuss@wsj.com