Lockheed Helped by Ukraine-Driven Sales

"Lockheed Martin Corp. said the Pentagon has sped up purchases of weapons headed to Ukraine, though supply-chain challenges continue to restrict production.

The world's largest defense company by sales is one of the biggest beneficiaries of the $27 billion in military equipment committed by the U.S. to Ukraine, though so far only $6.6 billion is under contract to industry.

Defense executives have cited shortages of labor and components, as well as the need for more certainty that if companies invest more to boost capacity, orders will flow.

Jay Malave, Lockheed Martin's chief financial officer, said contracts are being awarded at a faster clip. "The DOD has accelerated their speed to get them where they want to be," he said.

The company, which also makes F-35 combat jets, has said it will take two years to double production of Javelin antitank missiles, co-produced with partner Raytheon Technologies Corp., and Himars rocket launchers, both being widely used by Ukraine.

Mr. Malave said suppliers stepped up to a faster production pace in the final quarter of last year, helping boost Lockheed Martin's quarterly sales to $19 billion, about 3% above the company's internal planning.

"The whole value chain has been able to operate at a higher level," he said, though metrics such as on-time deliveries didn't improve much in the fourth quarter and labor shortages continue to pinch production.

The company reported a net profit of $1.91 billion for the quarter ended Dec. 31, compared with $2.05 billion a year earlier. Per-share profit slipped to $7.40 from $7.47, just short of the consensus forecast of analysts polled by FactSet.

Lockheed Martin left its existing guidance for flat sales in 2023 largely unchanged because of the continuing supply-chain challenges, forecasting a return to growth in 2024 when the situation is expected to improve.

The midpoint of Lockheed Martin's current guidance for 2023 sales is $65.5 billion, compared with $66 billion in 2022. Sales to support Ukraine remain only a small part of its order backlog, which topped $150 billion in 2022." [1]

1.  Business News: Lockheed Helped by Ukraine-Driven Sales
Cameron, Doug.  Wall Street Journal, Eastern edition; New York, N.Y. [New York, N.Y]. 25 Jan 2023: B.7.