Northrop Grumman Corp., the maker of Global Hawk surveillance drones, reported first-quarter profit that beat analysts' estimates while maintaining its full- year forecast amid U.S. budget cuts.
Net income from continuing operations fell 3.4 percent in the quarter to $489 million, or $2.03 a share, compared with $506 million, or $1.96 a share, a year earlier, the Falls Church, Virginia-based company with local operations in Rolling Meandows, said today in a statement. Analysts had predicted $1.73 a share, the average of 19 estimates compiled by Bloomberg. Sales fell 1.5 percent to $6.1 billion.
Northrop has divested low-margin businesses such as shipbuilding and reduced its workforce in anticipation of federal budget cuts. The company reaffirmed its 2013 forecast for profit from $6.85 to $7.15 a share made in January.
Northrop rose 1.6 percent to $72.62 at 9:54 a.m. in New York trading.
Across-the-board budget reductions known as sequestration began taking effect on March 1. They will strip $1.2 trillion from national security and domestic programs over nine years unless President Barack Obama and congressional Republicans agree to replace them with a broad bipartisan budget deal.
The cuts were crafted as a penalty for failing to agree on a deficit-reduction strategy.
Northrop rose 1 percent to $71.49 in New York trading yesterday and has advanced 5.8 percent this year.
While first-quarter revenue declined, sales in the company's aerospace systems unit rose 4.3 percent due to more work tied to Lockheed Martin Corp.'s F-35 jet, the Pentagon's most expensive weapons system.
The company booked $1.3 billion last year for work on the F-35 jet, according to a federal regulatory filing. The program was protected in the president's budget request for next year.
Lockheed, the world's largest defense company, yesterday said its first-quarter profit beat analysts' estimates as sales declined 2 percent compared with the same period a year earlier. It cautioned that the automatic budget reductions might push 2013 sales to the low end of its prior forecast.