Northrop Grumman (NYSE: NOC) Wednesday said its first-quarter sales increased from last year, aided by stable demand for aerospace products. Consequently, earnings of the defense contractor rose and topped the Wall Street estimates. Meanwhile, the company’s shares traded lower after the report as the top-line fell short of expectations.
March-quarter sales climbed 22% year-over-year to $8.19 billion, helped by higher sales of aerospace systems and solid demand for innovation systems, which was partially offset by weakness in technology services. Analysts had predicted a bigger sales number. The performance of the mission systems segment was broadly in line with the year-ago period.
Reflecting the uptick in sales, net profit advanced 3% to $863 million, while earnings per share gained 6% to $5.06, which came in above the market’s projection. However, the growth was restricted by plant/equipment step-up depreciation and charges related to asset amortization.
Higher sales of aerospace systems and innovation systems were partially offset by a drop in the demand for technology services
“These results are a good start to the year and provide the building blocks for our future growth. With a continued emphasis on performance, we are sharpening our focus on operational efficiency and agility to bring the power of our portfolio to solve our customers’ rapidly evolving needs,” said Northrop CEO Kathy Warden.
The Falls Church, Virginia-based company revised up the outlook for full-year 2019 earnings per share – adjusted for any mark-to-market charges or benefits – to $18.90-$19.30 from the previous forecast of $18.50-$19.00. The sales guidance was reaffirmed at $34 billion, while the estimate for interest expense was lowered to $560 million from $590 million. The company continues to expect double-digit operating margins for the year.
Earlier, General Dynamics (GD) reported a 23% growth in first-quarter revenues to $9.3 billion. Despite, the solid top-line growth, earnings dropped to $2.56 per share hurt by higher costs.
After slipping to a near-two-year low in December last year, shares of Northrop Grumman shifted to the recovery mode this year, gaining around 14% so far. The stock opened Wednesday’s trading sharply lower and continued to lose in the early hours.