By Mike Stone
WASHINGTON (Reuters) – U.S. weapons maker Lockheed Martin Corp lowered its 2021 revenue expectations by 2.5% to $67 billion on Tuesday and said next year’s revenue could fall to $66 billion as the COVID-19 pandemic hobbles the company’s supply chain.
The pandemic has crippled many companies’ ability to send and receive the parts and supplies they need to produce a wide range of products, creating shortages, reducing inventories and hammering profits.
Lockheed’s poor outlook, just 66-days from year-end, came after it reassessed its five-year business plan “given recent external and programmatic events,” Chief Executive Jim Taiclet said in the earnings report that dashed hopes the United States’s largest arms maker could muscle its way through the pandemic.
The reassessment means “a slight reduction in revenue in 2022 and roughly flat to low-single-digit growth rates in both revenue and segment operating profit over the next few years” as Lockheed prioritizes researching next-generation weapons systems like hypersonic weapons and returning cash to shareholders, the CEO added.
Support for the defense industry could be on the way as congressional committees are set to start their conference on the Biden administration’s 2022 defense policy bill that outlines increased spending.
Lockheed, however, raised its earnings per share guidance for 2021 to $22.45, more than analyst estimates of $22.19, as operating profits rose 6.6% versus same period last year.
The third quarter which ended on Sept. 26 showed sales at Lockheed’s largest unit, aeronautics – which makes the F-35 fighter jet, down 2% from a year earlier when the pandemic locked down many parts of the defense industry’s supply chain.
Through Sept. 26, the unit made 90 F-35 deliveries with 36 occurring in the third quarter. Lockheed aims to deliver 133 to 139 of the stealthy jets this year.
In 2022, Lockheed plans to deliver 151 to 153 of the fighter aircraft.
Lockheed’s third-quarter revenue was $16 billion, 6.6% below analyst revenue estimate of $17.1 billion, Refinitiv data shows.
(Reporting by Mike Stone in Washington; Editing by Himani Sarkar)
