© Stocksak. FILE PHOTO – A Northrop Grumman building in El Segundo (California), U.S.A, February 7, 2019, REUTERS/Mike Blake
By Mike Stone, Nathan Gomes
(Stocksak) – U.S. defense contractor Northrop Grumman Corp (NYSE:) said Thursday that full-year profit and sales were expected to be close to the bottom of its forecast due to lingering supply chain problems and higher costs, which have weighed down earnings across the industry.
The shares of the company traded flat on Wednesday at $531.97 in New York mid-day trading. They had dropped to $505 prior to the opening bell. Northrop projects a 4% to 5% increase in revenue by 2023.
Northrop had projected 2022 sales of $36.2 billion to $26.6 billion, with a profit per share of between $24.50 – $25.10.
The supply chain constraints that have impacted both their production and their suppliers continue to impact defense companies, which are still suffering from higher costs and labor shortages.
Kathy Warden, Chief Executive, stated that inflation remains at a 40-year high, lead time have been extended in some areas of our supply chain and the labor market shows signs easing. However, it remains tight for critical skill sets.
Northrop sees an improvement in labor supply after enduring COVID-19-related labor problems.
Stocksak was interviewed by Dave Keffer, Chief Financial Officer. He praised his human resources team and said that labor availability is improving slowly as 2022 progresses.
Keffer stated that there was “a lot more day-to-day blocking” and “a lot of tackling across a company of our size to have 2,700 hires” in the quarter.
The Aeronautics Systems unit, which produces military aircraft like the B-21 Raider aircraft, saw its revenue drop by about 7% to $2.54 Billion in the third quarter ending Sept. 30, due to lower sales of aircraft and autonomous aircraft systems.
Refinitiv data shows that overall revenue rose 3% to $8.97Billion in the quarter, but fell short of analysts’ expectations of $9.13B.
Due to increased demand for space exploration, sales at the Space Systems division grew 18% to $3.16billion. This helped the Falls Church-based company offset lower sales at aeronautics, defense and other units.
Northrop reported a 14% drop in quarterly adjusted net earnings, to $915million, or $5.89 per stock, below expectations of $6.11 a share. The company’s year-to date book-tobill, which measures the ratio of units shipped and billed to orders, was 1.14.