
Lockheed profit dives 80% on $1.6 billion charge, shares tumble
The company also trimmed its 2025 profit outlook by $1.5 billion or 18% and said it now targets $6.65 billion in operating profit for the year.
This new guidance, revised down since the company's last estimate in April, did not include potential impacts from tariffs which have affected other defense companies with international customers.
Lockheed's tariff risk is relatively low, as its supply chains and labor are largely domestic, said Brian Mulberry, portfolio manager at Zacks Investment Management.
The company's hefty charge stemmed from difficulties with a classified program in its Aeronautics business and international helicopter programs in its Sikorsky unit.
Defense contractors are grappling with mounting cost pressures as inflation and supply chain disruptions drive up expenses on long-term programs priced years ago.
Many of these contracts — often fixed-price — were negotiated before the post-pandemic surge in labor, material, and component costs, forcing contractors such as Lockheed to absorb overruns.
Apart from the $950 million charge on the classified program, Lockheed took a $570 million hit on its work for the Canadian government relating to the procurement of its CH-148 Cyclone maritime helicopters.
The Turkish Utility Helicopter Program (TUHP) saw a $95 million loss as well. This charge was due to a restructuring caused by U.S. government sanctions on Turkish entities and persons involved in the program, Taiclet said in a call with analysts.
Lockheed is also engaged in a tussle with U.S. tax authorities who assert the company owes an additional $4.6 billion tax bill, executives said, adding they were pursuing a remedy that could include litigation.
Additionally, the company provided an update on progress with upgrades on its F-35 jets, saying it had completed hardware integration and released new software on the fleet.
Earlier this month, the Pentagon's program office confirmed the final delivery of 72 jets held in long-term storage in 2024.
Lockheed's net income in the quarter fell to $342 million, or $1.46 per share from $1.64 billion, or $6.85 per share, a year earlier.
Excluding these charges, the group posted an adjusted profit of $7.29 per share, beating an average estimate of $6.44 per share according to data compiled by LSEG.
Lockheed missed Wall Street estimates for second-quarter revenue, which came in at $18.16 billion, compared with an average expectation of $18.57 billion.
Hashtags

Try Our AI Features
Explore what Daily8 AI can do for you:
Comments
No comments yet...
Related Articles


The Independent
25 minutes ago
- The Independent
Flurry of trade deals offers relief for some Asian countries, while others wait
Donald Trump has announced trade deals with Japan and a handful of other Asian countries that will relieve some pressure on companies and consumers from sharply higher tariffs on their exports to the United States. A deal with China is under negotiation, with U.S. Treasury Secretary Scott Bessent saying an Aug. 12 deadline might be postponed again to allow more time for talks. Steep tariffs on U.S. imports of steel and aluminum remain, however, and many other countries, including South Korea and Thailand, have yet to clinch agreements. Overall, economists say the tariffs inevitably will dent growth in Asia and the world. The deals reached so far, ahead of Trump's Aug. 1 deadline Trump and Japanese Prime Minister Shigeru Ishiba announced a deal Wednesday that will impose 15% tariffs on U.S. imports from Japan, down from Trump's proposed 25% 'reciprocal' tariffs. It was a huge relief for automakers like Toyota Motor Corp. and Honda, whose shares jumped by double digits in Tokyo. Trump also announced trade deals with the Philippines and Indonesia. After meeting with Philippine President Ferdinand Marcos, Jr., Trump said the import tax on products from his country would be subject to a 19% tariff, down just 1% from the earlier threat of a 20% tariff. Indonesia also will face a 19% tariff, down from the 32% rate Trump had recently said would apply, and it committed to eliminating nearly all of its trade barriers for imports of American goods. Earlier, Trump announced that Vietnam's exports would face a 20% tariff, with double that rate for goods transshipped from China, though there has been no formal announcement. Talks with China may be extended Negotiations with China are subject to an Aug. 12 deadline, but it's likely to be extended, Bessent told Fox Business on Tuesday. He said the two sides were due to hold another round of talks, this time in Sweden, early next week. Meanwhile, Trump said a trip to China may happen soon, hinting at efforts to stabilize U.S.-China trade relations. A preliminary agreement announced in June paved the way for China to lift some restrictions on its exports of rare earths, minerals critical for high technology and other manufacturing. In May, the U.S. agreed to drop Trump's 145% tariff rate on Chinese goods to 30% for 90 days, while China agreed to lower its 125% rate on U.S. goods to 10%. The reprieve allowed companies more time to rush to try to beat the potentially higher tariffs, giving a boost to Chinese exports and alleviating some of the pressure on its manufacturing sector. But prolonged uncertainty over what Trump might do has left companies wary about committing to further investment in China. No deals yet for South Korea and other Asian countries Pressure is mounting on some countries in Asia and elsewhere as the Aug. 1 deadline for striking deals approaches. Trump sent letters, posted on Truth Social, outlining higher tariffs some countries will face if they fail to reach agreements. He said they'd face even higher tariffs if they retaliate by raising their own import duties. South Korea's is set at 25%. Imports from Myanmar and Laos would be taxed at 40%, Cambodia and Thailand at 36%, Serbia and Bangladesh at 35%, South Africa and Bosnia and Herzegovina at 30% and Kazakhstan, Malaysia and Tunisia at 25%. Nearly every country has faced a minimum 10% levy on goods entering the U.S. since April, on top of other sectoral levies. Economists expect tariffs to sap growth even with trade deals Even after Trump has pulled back from the harshest of his threatened tariffs, the onslaught of uncertainty and higher costs for both manufacturers and consumers has raised risks for the regional and global economy. Economists have been downgrading their estimates for growth in 2025 and beyond. The Asian Development Bank said Wednesday it had cut its growth estimate for economies in developing Asia and the Pacific to 4.7% in 2025 and 4.6% in 2026, down 0.2 percentage points and 0.1 percentage points. The outlook for the region could be further dimmed by an escalation of tariffs and trade friction, it said. 'Other risks include conflicts and geopolitical tensions that could disrupt global supply chains and raise energy prices,' as well as a deterioration in China's ailing property market. Economists at AMRO were less optimistic, expecting growth for Southeast Asia and other major economies in Asia at 3.8% in 2025 and 3.6% next year. While countries in the region have moved to protect their economies from Trump's trade shock, they face significant uncertainties, said AMRO's chief economist, Dong He. 'Uneven progress in tariff negotiations and the potential expansion of tariffs to additional products could further disrupt trade activities and weigh on growth for the region,' he said.


Reuters
26 minutes ago
- Reuters
UniCredit raises profit outlook after dropping Banco BPM bid
MILAN, July 22 (Reuters) - UniCredit on Wednesday reported a higher than expected quarterly profit and raised its 2025 outlook, a day after ditching a takeover bid for rival Banco BPM which had led Italy's second biggest bank to clash with the government. UniCredit ( opens new tab late on Tuesday said it was withdrawing the offer, blaming government intervention in the process, which it said deprived Banco BPM ( opens new tab shareholders, as well as Italy's economy, of a good opportunity. "We've drawn a line on this transaction," CEO Andrea Orcel told CNBC television. "At some point you need to cut your losses, eliminate your drag and focus on what you control." UniCredit's tussle with the Rome administration over Banco BPM highlights a wider European trend of governments getting involved in banking consolidation. Net profit in the three months through June totalled 2.9 billion euros ($3.4 billion) excluding one-off items, and 3.3 billion euros when including those. That is above a 2.5 billion euro forecast for the unadjusted figure in a company-gathered analyst consensus, and up from 2.7 billion euros a year ago. UniCredit forecast a net profit in the full year of around 10.5 billion euros, above a previous guidance of more than 9.3 billion euros, helped by a smaller than anticipated decline in the income from the gap in deposit and lending rates and further cost cuts. Overall revenues are still set to decline to 23.5 billion euros this year from 24.8 billion in 2025. It said it would pay out to shareholders at least 30 billion euros in 2025-2027, of which at least half in cash dividends and the rest through share buybacks, depending on potential acquisitions. Orcel has boosted UniCredit's profits in recent years by slashing costs as it took advantage of higher rates, to generously reward investors and drive up the share price. However, his ambitious expansion strategy has faced several setbacks. In 2021 he walked away from a deal with Italy's government to buy Monte dei Paschi ( opens new tab and in recent months clashed with Germany over plans to buy Commerzbank ( opens new tab. Its bid for Banco BPM in November derailed government plans to combine BPM with Monte dei Paschi, prompting Rome to use its special powers to intervene in corporate deals, and triggering a legal dispute. UniCredit said it had consolidated a 9.9% equity stake in Commerzbank, with a 335 million euro hit in the second quarter due mainly to hedging costs related to that, one of the one-off items of the period. They also include a positive accounting impact from the Commerzbank holding and the revaluation of UniCredit's stakes in life insurance ventures in which it has bought out its partners. UniCredit, which also plans to consolidate this quarter a stake in Greece's Alpha Bank ( opens new tab, said both Commerzbank and Alpha would boost its profits from 2026. By consolidating the full 29% Commerzbank stake it owns, still partly as derivatives it will convert into shares, UniCredit now expects a 2027 profit of more than 11 billion euros, up from 10 billion previously. "We're rooting for the success of Commerzbank because their success is our success," Orcel said as UniCredit forecast a contribution to 2026 earnings from both banks' stakes. ($1 = 0.8522 euros)


Reuters
44 minutes ago
- Reuters
Texas Instruments slumps as tariff uncertainty hits demand
July 22 (Reuters) - Texas Instruments' (TXN.O), opens new tab quarterly profit forecast failed to impress investors as it pointed to weaker-than-expected demand for its analog chips from some customers and underscored tariff-related uncertainty. Shares in the company slumped 12% in early European trading on Wednesday, tracking losses in extended trading on Wall Street on Tuesday. The shares have risen more than 13% this year. Chipmakers such as Texas Instruments do not directly face U.S. President Donald Trump's elevated tariffs yet, but the cost of chip-making tools has risen, and some of their end customers have pared back spending. "Tariffs and geopolitics are disrupting and reshaping global supply chains," CEO Haviv Ilan said on a post-earnings call. "Automotive recovery has been shallow." TI expects third-quarter earnings between $1.36 per share and $1.60 per share, the midpoint of which was below analysts' estimates of $1.49 per share, according to data compiled by LSEG. It expects revenue between $4.45 billion and $4.80 billion, compared with market expectations of $4.59 billion. The chipmaker reported sales of $4.45 billion for the second quarter, beating estimates. ASML ( opens new tab, the biggest supplier of chip-making equipment globally, warned last week that it might not achieve revenue growth in 2026, as uncertainty in tariff talks has spurred U.S. chipmakers to delay finalizing investments. TSMC, the world's biggest chipmaking factory, said last week that it was being conservative with its outlook to account for tariff-related disruption. In response to analysts' questions on a post-earnings call about whether tariffs were prompting customers to pull in orders and bumping up revenue, TI CEO Ilan said he "can't rule out the possibility." "When you see such a strong behavior in quarter two versus quarter one, you have to attribute some of it to the tariff environment," he said. Analysts also grilled TI executives on what they characterized as a change in tone in remarks from the previous quarter, when leadership had touted indications of a significant demand rebound, independent of tariff-related factors. "Management voiced caution as they saw some normalization of orders through the second quarter," said Summit Insights analyst Kinngai Chan. TI has made big investments to expand its capacity for cost-effective 300-millimeter wafer manufacturing technology and plans to shell out more than $60 billion to expand its U.S. manufacturing footprint. The company also expects factory loadings in the third quarter to remain at the same level as the second quarter, which could hurt margins, Stifel analyst Tore Svanberg said, referring to the volume of chips being manufactured. Increasing factory loadings spreads out fixed costs over more output, typically improving margins. Svanberg said TI's stock fell post-market because "investors were expecting somewhat more, especially for the third quarter outlook," including for gross margins. CFO Rafael Lizardi said TI expects gross margin growth to be flat in the third quarter. The company's profit outlook does not include changes related to recently enacted U.S. tax legislation, TI said, after Trump signed into law a massive package of tax and spending cuts earlier this month. TI expects the new tax regime to result in a higher tax rate in the third quarter and through 2025, which will eventually decrease in 2026 and beyond, Ilan said.