Despite Low Earnings, Litton Surpasses NYSE Forecasts
Military shipbuilder Litton Industries Inc. on Wednesday reported lower fiscal first-quarter earnings, but surpassed Wall Street forecasts due to strength in its recently refocused core operations.Litton, the largest builder of non-nuclear ships for the U.S. Navy, reported a net profit of $44.9 million, or $.97 per share, for the quarter ended Oct. 31, down from $49.9 million, or $1.07 a share, a year earlier. Analysts had expected earnings of $.95 a share, according to tracking firm First Call/Thomson Financial.
Excluding discontinued operations, Litton posted earnings of $34.4 million, or $.74 per share, versus $36.3 million, or $.78 per share, a year ago.
Total sales and service revenues reached $1.08 billion in the quarter, up from $999.9 million in the same quarter last year.
"Litton's first-quarter financial results met our previously announced targets," a top company official said. "Although the quarter's results were somewhat lower than last year's first quarter due to a changing sales mix related to new product and program introductions, several positive trends in our refocused core businesses were reaffirmed." In November, the company announced plans to sell its defense electronics unit, which accounted for about 28 percent of annual revenues. The planned sale was part of a strategic move to focus on high-growth markets such as telecommunications, broadband communications, information security and shipbuilding.
Litton's electronic components and materials segment reported a 25 percent increase in sales and 34 percent increase in operating profit for the quarter on strong demand from telecommunications and networking customers.
The ship systems group reported operating profit of $45.7 million on revenue of $544 million, compared with profit of $58.6 million on revenue of $472 million. The segment's operating profit margin was 8.4 percent for the quarter, meeting company targets, versus 12.4 percent a year ago. The increasing mix of lead ship activity on double-hulled Polar tankers and commercial cruise ships hurt the segment's margin, Litton said, adding that future performance would be determined after lead ship testing and evaluation during upcoming sea trials.