Lockheed Martin trimmed its revenue outlook for 2022 as it warned that supply chain disruptions, which weighed on its latest results, would persist for the remainder of the year.
“A lot of companies in our supply chain, including us, were impacted by extended absences” during the initial wave of the Omicron variant of Covid-19 “and while we’ve seen improvement in the cadence of our operations, we still have yet to figure out how to recover what was lost,” chief financial officer Jay Malave told the Financial Times.
The defence contractor lowered its revenue outlook for 2022 by $750mn to $65.25bn as it anticipated supply chain issues would persist for the rest of the year. About “$550mn of that was sitting in our aeronautics business due to supply chain pressures, as well as some of the programme delays that we’ve had, particularly [on] the F-16,” said Malave.
“But having said that, we offset the profit impact of the lower volume through better margins”, which are now expected to be 11 per cent in 2022, up from 10.9 per cent last year.
Lockheed remains bullish on the anticipated increase in global defence spending in the wake of the Russian invasion of Ukraine, despite the supply snags throughout the industry.
But its second-quarter results fell short of Wall Street expectations. In the three months ended June 26, Lockheed reported net income of $309mn on $15.4bn in revenue. Its profits were weighed down by about $1.4bn after tax of non-operational charges, mostly related to its pension fund, while analysts expected more than $16bn in revenue.
Lockheed shares were down about 5 per cent in pre-market trading on Tuesday morning.
Net sales of Lockheed’s marquee F-35 fighter jet programme were down $945mn in the second quarter, compared with the same period last year.
About $300mn of that was because programme funding ran out and negotiations with the Pentagon for a new contract had not been concluded, said Malave. The remaining sales decrease was supply chain related.