General Dynamics 2Q Profit Slips 3.6%, Boosts EPS Forecast

   DOW JONES NEWSWIRES 
 

General Dynamics Corp.'s (GD) second-quarter profit slipped 3.6% on a year-earlier gain as the aerospace and defense contractor saw revenue growth across the company.

It also raised its full-year earnings outlook by a nickel to $6.05 to $6.15 a share.

Defense companies, which are expected to weather the recession better than most because governments consider their services essential, have nonetheless been hurt by their exposure to the commercial aviation and business-jet industries.

Societe Generale analyst Zafar Khan said Monday the company's Gulfstream jet deliveries may not recover in the near future as corporations defer non-essential spending, despite some indicators pointing to a stabilization in business-jet activities.

The company posted income of $618 million, or $1.60 a share, down from $641 million, or $1.60 a share, a year earlier. There were 3.7% fewer shares outstanding in the most recent period. The latest results included a 1-cent loss from discontinued operations, while the prior year's included a 9-cent gain from a tax benefit.

Revenue increased 11% to $8.1 billion.

Analysts surveyed by Thomson Reuters expected earnings of $1.57 on revenue of $8.13 billion.

Operating margin rose to 11.7% from 11%.

General Dynamics' largest business, information technology, saw earnings decline 2.7% as revenue rose 3.5%. The aerospace segment reported a 10% profit drop despite a 6.5% sales jump.

The company's funded backlog grew 5.3% to $47.7 billion.

General Dynamics said last month it would buy sensor and camera maker Axsys Technologies Inc. (AXYS) for $643 million as it looks to bulk up its intelligence offerings. Meanwhile, a federal appeals court ruled last month the government was justified in canceling a multibillion-dollar contract to build a new Navy stealth fighter.

Shares closed Tuesday at $53.74 and haven't traded premarket.

-By Kerry Grace Benn, Dow Jones Newswires; 212-416-2353; [e-mail]