Lockheed Martin Corp. lived down to expectations yesterday, reporting a 15 percent drop in net earnings for the fourth quarter compared with the previous year.
The company had cautioned that delays in space launches and military aircraft deliveries would hurt results. The Bethesda-based defense and aerospace company reported net income of $308 million, or 81 cents per diluted share, for the three months that ended Dec. 31 compared with profit of $363 million, or 89 cents per diluted share, for the 1997 quarter.
The per share figures reflect a 2-for-1 stock split the company announced in December, but do not include several one-time charges.
Counting the expensive shutdown of a California computer graphics unit called CalComp Technology Inc., net earnings for the fourth quarter of 1998 sank to $125 million, or 33 cents per diluted share.
"Clearly, the fourth quarter of the year in 1998 was particularly difficult for the corporation. [but] I am confident these bumps in the road are about to smooth out," said Marcus C. Bennett, who will retire at the end of the month as chief financial officer but will remain on the corporate board of directors.
The board yesterday named Philip J. Duke, currently vice president for finance, to be Bennett's replacement as CFO.
Lockheed Martin predicted the poor numbers last month, and analysts had anticipated yesterday's report. Nonetheless, its stock dropped $1.25 yesterday to close at $35.9375 a share.
Net sales for the fourth quarter were $7.18 billion, down almost 9 percent from the $7.88 billion logged during the year-before period. That brought total sales for 1998 to $26.26 billion, down from $28.07 billion for 1997.
Not counting the charges and divestitures, net earnings for all of 1998 amounted to $1.18 billion, compared with $1.29 billion for 1997. With the one-time factors, 1998 earnings were $1 billion, or $2.63 per diluted share, compared with $1.3 billion, or $3.04 per diluted share, for 1997. Backlog at the end of 1998 was $45.3 billion, down from $47 billion at the end of 1997.
Electronics businesses performed well for Lockheed Martin during the fourth quarter, but space and aeronautics units trailed badly. The company said those segments should go forward this year as postponed launches and aircraft deliveries take place.
Lockheed Martin expects to close a sale of F-16 fighter jets to the United Arab Emirates during the first half of the year, executives said. But they cautioned that the first quarter will be soft because of investments in telecommunications ventures, with expected earnings per share as much as 20 cents below the 71 cents per share reported for the first quarter of 1998.
Pub Date: 1/29/99