Lockheed Martin anticipates increased sales as the war boosts orders

Lockheed Martin expects to resume growth this year, reversing an earlier prediction that sales would decline despite the conflict in Ukraine and rising global military budgets. 

Analysts surveyed by FactSet predicted higher sales and profits for the second quarter, and the company increased its full-year guidance for both. Next week, Northrop Grumman and RTX, formerly known as Raytheon Technologies, will release their earnings reports.

The largest defense company in the world reported a net profit of $1.68 billion for the three months that ended on June 30, compared to $309 million in the same period last year, with a charge on a classified program weighing down the latter figure.

Large orders for its GMLRS and Himars missiles, as well as the F-35 combat jet, helped sales rise 8% to $16.7 billion in the quarter.

The midpoint of the forecast for full-year sales is $66.75 billion, up 1.5% from Lockheed's earlier guidance in April. This would surpass the $66 billion realized in 2022. 

Due to increased demand from more nations for the F-35 and Patriot missile defense systems, as well as rockets and launchers, Lockheed Martin has benefited more than most of its competitors from the Ukraine conflict. A record $158 billion worth of orders are currently outstanding.

 Its missiles and fire control unit's order backlog increased by 24% during the quarter to $34 billion, though it may take months or even years for this to become revenue. On flat sales during the quarter, operating profit decreased by 11%.

Profit margins are shrinking, indicating that defense contractors are still dealing with supply chain issues, labor shortages, and the lingering effects of inflation.