ULA a Bright Spot in Lockheed’s First-half Results

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PARIS — Lockheed Martin Space Systems on July 24 reported lower revenue and operating profit for the six months ending June 30 but said the profit picture was helped by higher earnings from its 50 percent share in United Launch Alliance (ULA) of Denver, which builds and operates the U.S. Atlas and Delta rockets.

In what may be a signal that Lockheed Martin has won a long-running competition with Raytheon to build the U.S. Air Force’s next generation of ground-based radars to track space objects, called the Space Fence, Lockheed Chief Financial Officer Bruce L. Tanner said the company expected a contract award by late September.

In a conference call with investors and a filing with the U.S. Securities and Exchange Commission, Bethesda, Md.-based Lockheed Martin modestly raised its estimate of operating profit for the Space Systems division for 2013 despite the lackluster performance in the first six months of the year.

Tanner said in the conference call that earnings from ULA vary depending on both the frequency of missions for the U.S. government and the mix of vehicles being launched. ULA’s other joint venture partner, Chicago-based Boeing Co., developed the Delta rockets, while Lockheed Martin developed the Atlas.

For the six months ending June 30, Lockheed reported that ULA-generated operating profit was $65 million higher than the same period last year, totaling $140 million, which is equivalent to 28 percent of the total operating profit of the Space Systems division. ULA equity earnings accounted for 14 percent of Space Systems profit for the same period a year ago.

Space Systems revenue for the six months ending June 30 was $4.05 billion, down nearly 6 percent from last year. Operating profit, at $506 million, was down 6 percent, although the operating-profit margin, at 12.5 percent, was not much changed from the 12.6 percent reported for the first half of 2012.

The revenue decline is mainly due to the fact that Lockheed Martin delivered two commercial telecommunications satellites to customers in the first half of 2012, and none in the first half of this year. 

The company said its work on NASA’s Orion Multi-Purpose Crew Vehicle also generated lower revenue this year than last. The increased revenue from U.S. Defense Department programs including the Advanced Extremely High Frequency telecommunications satellites, the GPS positioning, navigation and timing satellites and missile-defense programs was not enough to compensate for the lower NASA and commercial work.

Tanner said the company as a whole has seen fewer effects of the automatic budget cuts at the U.S. government, called sequestration, than feared as Defense Department program managers have been able to minimize contract renegotiations with industrial contractors.