Lockheed Martin buoyed by record $205bn in orders

Lockheed Martin expects its order backlog to reach a record $US140bn ($205bn) by the end of the year.

A Lockheed Martin processing plant for the newest range of joint stealth fighter jets.

Lockheed Martin expects its order backlog to reach a record $US140bn ($205bn) by the end of the year, showing the resilience of some US defence companies in the face of domestic budget pressures and geopolitical turmoil.

The world’s largest defence company by revenue said on Tuesday that, while it expected sales growth to slow next year following surging sales of missiles, space systems and its F-35 combat jet in 2019, it would still generate more cash for dividends and stock buybacks.

The Pentagon is working under a temporary budget that freezes funding at current-year levels and prevents the launch of some new programs, but Lockheed Martin said prior contracts and recent wins in areas such as hypersonic missiles and radar systems provided a long tail of ­future work.

US defence companies have benefited from higher Pentagon spending over the past two years, but investors remain concerned about a domestic budget impasse as well as the outcome of the next presidential election.

Lockheed Martin chief financial officer Ken Possenriede said the company expected to add $US17bn in orders this year, with the backlog stretching out further than in recent years. This in part reflects the big ramp-up in F-35 production, with deliveries set to climb to 140 next year, from 131 in 2019. A final deal for the sale of more than 400 jets — which at $US35bn would be the largest-ever military contract — was ­expected in the next couple of weeks, he said.

Mr Possenriede said the outlook for its Sikorsky helicopter units was improving, having been a drag on the company in recent quarters because of a downturn in demand for commercial choppers. Sikorsky is building the new presidential helicopter fleet, as well as new choppers for the navy and air force.

Mr Possenriede said that staffing remained one of the biggest challenges, though the logjam of security clearances that has roiled the industry in recent years was clearing.

His comments came as Lockheed Martin reported forecast-beating quarterly profit and raised its full-year guidance.

The initial 2020 outlook fell just shy of analysts’ expectations.

Profit in the September quarter rose to $US1.61bn, from $US1.47bn a year earlier, with per-share earnings climbing to $US5.70, from $US5.18, well above the $US5.02 consensus among analysts polled by FactSet.