Lockheed Martin's Q2 profit plummets on US$1.6 billion charge
Net income fell to US$342 million, or US$1.46 per share, compared with US$1.64 billion, or US$6.85 per share, a year earlier.
Lockheed said the charge stemmed from difficulties with a classified programme in its Aeronautics business and certain international helicopter programmes in its Sikorsky unit.
Defence contractors are grappling with mounting cost pressures as inflation and supply chain disruptions drive up expenses on long-term programmes priced years ago.
Many of these contracts – often fixed-price – were negotiated before the post-pandemic surge in labour, material, and component costs, forcing contractors such as Lockheed to absorb overruns.
Apart from the US$950 million charge on the classified programme, Lockheed took a US$570 million hit on its work for the Canadian government relating to the procurement of its CH-148 Cyclone maritime helicopters.
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'The Company is in ongoing discussions with the customer regarding a potential restructure to certain contractual terms and conditions and to expand the scope of work that would be beneficial to both parties,' Lockheed said of the programme.
Excluding these charges, however, the defence giant posted an adjusted profit of US$7.29 per share, beating estimates of US$6.44 per share, per data compiled by LSEG.
'Overall, the company's foundation remains solid and resilient,' chief executive Jim Taiclet said in the company's earnings statement.
Lockheed also missed Wall Street estimates for second-quarter revenue, which came in at US$18.16 billion, compared with expectations of US$18.57 billion. REUTERS
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