Northrop Grumman profit falls on ship charge
NEW YORK (Reuters) - Northrop Grumman Corp <NOC.N> said on Thursday first-quarter profit fell sharply as it took a large charge for a delayed warship.
The U.S. No. 3 defense contractor, which makes ships, nuclear submarines, unmanned surveillance aircraft and a range of military electronics, cut its full-year earnings forecast to account for the charge but said it saw solid underlying trends in the defense business.
Northrop, which earlier this year won a massive U.S. Air Force refueling tanker contract, reported net profit of $264 million, or 76 cents per share, compared with $387 million, or $1.10 per share, in the year-ago quarter.
That beat Wall Street's lowered forecast of 62 cents per share, according to Reuters Estimates. Analysts slashed their forecasts when Northrop warned about the ship charge earlier this month.
Sales rose 6 percent to $7.7 billion, in line with analysts' estimates.
Profit was cut by a $326 million charge to cover extra costs on the LHD-8 amphibious assault ship the company is building for the U.S. Navy, which is now six months behind schedule.
Northrop cut its full-year profit forecast to take account of the charge, but Chief Executive Ronald Sugar said "solid, underlying business trends" would help it hit longer-term financial targets.
The No. 3 Pentagon supplier, behind Lockheed Martin Corp <LMT.N> and Boeing Co <BA.N>, said it now expects full-year earnings of $4.90 to $5.15 per share, down from its last forecast of $5.50 to $5.75. Analysts are expecting $4.99, on average.
In February, Northrop and European partner EADS <EAD.PA> won a competition to build the first set of the Air Force's new refueling tankers, a contract that could ultimately be worth $35 billion. However, losing bidder Boeing has protested the award, and Boeing's supporters in Congress have vowed to block funding for the program.
Northrop also said on Thursday that it is increasing its quarterly dividend to 40 cents per share from 37 cents.
(Reporting by Bill Rigby; editing by John Wallace)