By Mike Stone and Shivansh Tiwary
(Reuters) -U.S. weapons maker Lockheed Martin Corp’s first-quarter results surpassed Wall Street targets on Tuesday despite parts and labor shortages, as simmering geopolitical tensions fueled demand from both U.S. and international customers.
Shares of the company rose as much as 3.8% to hit a record high of $508.1 in early trading.
Rising tensions in Europe, the South China Sea and the Indo-Pacific region have translated to more orders for Lockheed’s F-35 fighter aircraft, missiles and other defense equipments, driving quarterly net sales of $15.13 billion above estimates of $15.03 billion.
The Pentagon’s $858 billion defense budget for 2023 has also resulted in multiple contract wins for U.S. defense firms such as Lockheed, Raytheon Technologies and Northrop Grumman Corp, which count the U.S. Department of Defense as their biggest customer.
Bethesda, Maryland-based Lockheed reported GAAP earnings per share of $6.61, which included non-operational gains of $0.18 per share, and adjusted earnings of $6.43 per share for the first quarter ended March 26. Analysts were expecting profits of $6.06 per share.
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During the quarter, Australia said it would buy 40 Black Hawk military helicopters made by Lockheed from the U.S. for about $1.96 billion as it boosts defense spending over issues with China’s presence in the Indo-Pacific region.
Lockheed had also finalized a deal to sell 88 F-35 jets to Canada in a $14.2 billion project to replace the country’s aging fleet of fighter aircraft.
Supply-chain issues stemming from the pandemic are still hurting F-35 production volumes though, pulling down sales at the company’s aeronautics unit – its largest – by about 2.1% to $6.27 billion in the quarter.
Lockheed’s order backlog also fell to $145.1 billion as of quarter-end from $150 billion at the end of 2022.
The missiles maker reaffirmed its full-year outlook, projecting net sales in the range of about $65 billion to $66 billion and profits between $26.60 and $26.90 per share.
(Reporting by Shivansh Tiwary in Bengaluru; Editing by Devika Syamnath)