Unlock the Editor’s Digest for free
Roula Khalaf, Editor of the FT, selects her favourite stories in this weekly newsletter.
Lockheed Martin has raised its sales target for the full year as strong demand for its fighter jets and missiles helped drive performance ahead of expectations in the second quarter.
The US defence group said it expected revenues as high as $71.5bn this year, up from as much as $70bn, and higher than Wall Street estimates.
Lockheed said strong demand for its F-35 and F-16 fighter jets helped to boost second-quarter revenues by close to 9 per cent compared with the same period the previous year to $18.1bn. Shares in the company were up 4.5 per cent in New York.
Frank St John, chief operating officer, said the company expected strong demand for its products to continue in the wake of the war in Ukraine.
Several of Lockheed’s weapons systems, donated from US government stockpiles, played key roles on the Ukrainian battlefield, including the high-mobility artillery rocket system (Himars), guided multiple launch rocket system (GMLRS), Javelin missiles and its PAC-3 missiles, which are part of the Patriot missile defence system.
The conflict, he told the Financial Times at the Farnborough air show in the UK, had served to “raise a general awareness for the need of more deterrence and resource applied to defence”.
“Independent of Ukraine per se, I think there will be a strong demand for deterrence across Europe, certainly in south-east Asia and around the world,” he said.
St John played down some industry concerns that a new administration in the US after the November presidential election could affect business.
“Our history is that we’ve been able to establish good relationships with both parties and every time there is a new administration, there is always an effort to redouble the efforts to build those relationships,” he said.
“We don’t anticipate any change from what we’re doing or how we’re doing it,” he added. “Our focus is always on providing the deterrence capability, the security capabilities that essentially underpin the freedoms and form of government that we have.”
Lockheed last week resumed deliveries of its F-35 fighter jet after shipments were halted because of delayed upgrades intended to give the aircraft better displays and processing power. The company has continued to build at its maximum production rate throughout the pause in deliveries and has built up an inventory of parked jets.
The company will not slow its production rate. St John said it would “probably take three or four quarters to work our way through the backlog [of jets] that need to be delivered”.
Robert Stallard, analyst at Vertical Research Partners, said in a note: “After a couple of years grappling with a gummed-up supply chain, we see these Lockheed results as a clear sign that the defence industry is coming out on the other side of these challenges.”
Read the full article here
