Northrop Grumman Corp., maker of Global Hawk unmanned planes, reported sharply higher-than-expected third-quarter earnings despite a slight drop in sales, and raised its forecast for full-year sales.
Northrop, which builds a range of electronic equipment for the U.S. military, reported an 18 percent increase in earnings per share to $2.14 for the quarter. The result came in well above the $1.82 that analysts expected, according to a poll by Thomson Reuters I/B/E/S.
Northrop raised its forecast for full-year earnings per share to a range of $8 to $8.15, from $7.60 to $7.80. It also forecast higher operating margins, after boosting margins sharply in the quarter.
Northrop Chief Executive Wes Bush said the company would continue to reshape its portfolio and focus on "effective cash deployment."
Northrop, like most other weapons makers, has been cutting costs as it braces for a decline in Pentagon spending, which is slated to drop by about $1 trillion over the decade that began in 2013.
Revenues are down across the sector, but the decline has not been as bad this year as companies had expected. However, backlogs reflect a slowdown in government orders.
Northrop revised its forecast for full-year revenues up slightly to $24.4 billion from $24.3 billion.
The company reported lower revenues in its aerospace, information systems and technical service businesses, but said revenues in its electronic systems division rose by 4 percent in the quarter, lifted by higher volume for international and combat avionics programs.
Its total backlog was $37.5 billion at the end of the quarter, down from $40.8 billion at the end of December. Northrop said the decline was mainly due to reduced and delayed customer awards resulting from the current U.S. budget climate.
The decline also reflected a $1 billion adjustment in the unfunded backlog of the information systems division for expired periods of performance on active contracts, Northrop said.
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