Defense firms see more profit, shares rise
Aerospace and defense companies Raytheon Co, L-3 Communications and Goodrich reported higher profits and forecast strong performance next year as the sector promises to hold up relatively well against the onslaught of the credit crisis and global economic downturn, reports Reuters.
The results, which helped push their shares sharply higher, come after strong numbers from Lockheed Martin and Northrop Grumman Corp earlier this week, marred only by rising pension liabilities after an abysmal few months in global investment markets.
"With the underlying defense business still doing well for most industry participants, pension is probably the biggest risk facing the defense industry," said Macquarie Research analyst Robert Stallard.
Lockheed Martin and Boeing Co, the Pentagon's two largest suppliers, both warned of drops of more than 20 percent in their pension funds this year due to market turmoil, which will likely mean higher pension costs next year.
Raytheon, the U.S. No. 5 defense contractor, managed to sidestep that issue, forecasting a gain from its pension accounting next year, but the full position of its funds will not be established until the end of the year.
The company, which makes Patriot missile systems and a range of military and civilian electronics, reported a 43 percent increase in quarterly net profit to $427 million, or $1.01 per share.
That beat Wall Street's forecast of 97 cents per share, according to Reuters Estimates.