Defence contractor Northrop Grumman Corp on Thursday reported a 23 percent increase in quarterly earnings and raised yearly profit forecasts, helped by lower costs and rising sales of its electronic aerospace systems.
Like its main rival Lockheed Martin Corp, Northrop is moving toward electronic defence applications, away from traditional military hardware, while it focuses on profit margins as defence spending starts to level out after a period of sharp growth.
Northrop posted second-quarter net profit of $367 million, or $1.00 per share, up from $298 million, or 82 cents per share, a year earlier.
Sales rose 7 percent to $8 billion, while its total backlog of uncompleted work edged down to $57.1 billion from $58.1 billion at the end of last year.
The results beat Wall Street's forecast of 88 cents earnings per share, on sales of $7.8 billion, according to Reuters Estimates.
Northrop said results were boosted by its electronic systems unit, which includes its aerospace navigation and surveillance products. Gains at its ships unit, including its Newport News warship-building operation, were more modest.
Citing strength across its operations, Northrop raised its profit forecast for the full year to a range of $3.90 to $4.00 per share, up from its previous guidance of $3.70 to $3.85 per share. Analysts are expecting profit of $3.83 per share, on average.
For 2006, it forecast earnings of $4.10 to $4.30 per share, with the mid-point above Wall Street's current average estimate of $4.13 per share. Northrop's shares rose 25 cents, or 0.4 percent, to $56.90 in early trading on the New York Stock Exchange.
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