(Reuters) -Defense contractor General Dynamics Corp posted a 3% rise in third-quarter profit on Wednesday, boosted by higher sales in the unit that makes U.S. Navy ships and its aerospace division, which makes Gulfstream business jets, but trimmed its annual revenue target by $400 million.
“This quarter revenues decrease will impact the year, and we now expect revenue to be around $12.6 billion or $400 million less than our second-quarter update,” General Dynamics Chief Executive Phebe Novakovic said on a post-earnings conference call. Previous annual earnings per share guidance of $11.50 was unchanged.
Revenue rose 1.5% to $9.57 billion in the quarter, but missed an average analyst estimate of $9.85 billion, according to Refinitiv data.
Business aviation has picked up from pandemic lows as easing travel curbs and the lure of private flights fills order books for new corporate aircraft. On the call Novakovic said Gulfstream has seen “some upward pressure on pricing” for the jets with backlog reaching a six-year high.
General Dynamics shares were 0.6% higher in late morning trade.
The results follow yesterday’s 11% stock drop at weapons maker Lockheed Martin Corp after it lowered its full-year revenue target, citing supply-chain issues, and figures from Raytheon Technologies, which makes a mix of weapons and commercial aerospace components and which raised its forecast for full-year adjusted profit on encouraging signs in the commercial air travel space.
Novakovic said chip shortages impacted the company’s Mission Systems unit, which makes tanks, and while being mitigated – could last into next year.
Sales in General Dynamics’ Marine Systems unit, which makes nuclear-powered submarines and surface ships for the U.S. Navy, rose 9.6% to $2.64 billion, while aerospace sales rose 4.6% to $2.07 billion.
The company delivered 31 Gulfstreams versus 32 a year ago, and said it planed to deliver 40 in the fourth quarter.
General Dynamics earlier this month announced two new jets, with its larger Gulfstream G800 set to compete with Bombardier Inc’s Global 7500 and Dassault Aviation SA’s 10X.
Net earnings rose to $860 million, or $3.07 per share, beating an average analyst estimate of $2.98 for the quarter ended Oct. 3, up from $834 million, or $2.90 per share, a year earlier.
(Reporting by Sanjana Shivdas in Bengaluru and Mike Stone in Wasington D.C.; Editing by Ramakrishnan M., David Holmes, Jonathan Oatis and Marguerita Choy)
