General Dynamics Posts 15 Percent Jump in 1Q Profits

General Dynamics Corp., builder of nuclear submarines, tanks and destroyers, on Wednesday posted a 15 percent jump in first-quarter profits driven by strength in its combat systems and civilian aerospace operations.

The company also boosted its full-year profit target on the back of those stronger-than-expected quarterly results, noting the apparent U.S. economic slowdown had not affected sales at its major divisions.

General Dynamics, the nation's fourth-largest defense contractor, reported earnings of $212 million, or $1.05 per share, for the quarter, excluding a tax adjustment. After the adjustment, profit totaled $240 million, or $1.19 per share, compared with $184 million, or 91 cents per share, a year ago.

Analysts, on average, had pegged the company to post a profit of $.98 per share, with estimates ranging from $.87 to $1.00 per share, according to tracking firm Thomson Financial/First Call. Sales rose to $2.67 billion from $2.55 billion in the quarter.

General Dynamics' combat systems business generated a 30 percent increase in first-quarter income, thanks in part to a January acquisition. The aerospace group reported a 10 percent rise in income as the Gulfstream unit continued to make improvements in its manufacturing process.

General Dynamics, which makes the Seawolf submarine along with tanks and armored personnel carriers (APCs), has seen its stock rise over the past year, gaining 56 percent since March 2000, when defense shares began to rise as technology stocks dropped.

The shares have outperformed the broad-based Standard & Poor's 500 index by about 86 percent over the period but underperformed relative to its rivals in the aerospace and defense sector.