General Dynamics beats profit forecasts on higher aerospace sales

01/26/2022 | 07:23am

Jan 26 (Reuters) - General Dynamics Corp missed analyst revenue estimates on Wednesday, but beat fourth-quarter profit forecasts as its aerospace business grew strongly despite supply chain bottlenecks and lingering labor shortages.

The U.S. defense giant's shares turned positive, after an initial pre-market dip, when General Dynamics gave its 2022 outlook on a conference call with investors.

General Dynamics CEO Phebe Novakovic said on the call that it was expanding capacity in its business jet wing-making to meet rising demand.

She said that 2022 company-wide revenue was expected to be $39.2 billion to $39.45 billion, with a profit margin of 10.8% and earnings per share of between $12 and $12.15. The Reston, Virginia-based company's 2021 revenue was $38.5 billion.

General Dynamics' results come a day after Lockheed Martin and Raytheon Technologies Corp beat analyst estimates for quarterly profit, encouraged by easing restrictions around the globe.

U.S. President Joe Biden has not signaled he plans to slash the 2023 budget for General Dynamics' biggest customer, the Pentagon, despite progressive Democrats calling for a reduction in military spending and the U.S. withdrawal from Afghanistan.

Demand for business aviation stayed strong in the last three months of 2021, helped by easing travel restrictions, higher vaccination rates and the lure of private flights.

In the quarter the company delivered 39 Gulfstream business jets versus 40 a year ago. In October, the company said it planed to deliver 40 in the fourth quarter.

Sales in General Dynamics' aerospace unit which makes Gulfstream jets rose to $2.56 billion from $2.44 billion a year earlier, while overall revenue fell to $10.29 billion from $10.48 billion.

Net earnings fell to $952 million, or $3.39 per share, in the quarter ended Dec. 31, from $1 billion, or $3.49 per share, a year earlier.

Analysts, on average, expected the company to post a quarterly profit per share of $3.37, Refinitiv IBES data shows.

The company beat its own October annual earnings per share guidance of $11.50 by $0.05. (Reporting by Nathan Gomes in Bengaluru and Mike Stone in Washington; Editing by Aditya Soni, Ramakrishnan M., Chizu Nomiyama and Alexander Smith)

© Reuters 2022
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