PARIS — Lockheed Martin reported lower revenue and operating profit at its Space Systems division for the nine months ending Sept. 30 but said its space business continues to run at near-record operating profit margins.
In an Oct. 25 filing with the U.S. Securities and Exchange Commission and an Oct. 22 conference call with investors, Lockheed officials also said they expected hefty new Space Systems orders between now and the end of the year.
Lockheed officials said the effects of U.S. Defense Department budget cuts and the across-the-board spending reductions known as sequestration are having much less effect on the company’s business than had been feared.
Bethesda, Md.-based Lockheed said Space Systems revenue for the nine months ending Sept. 30 was $6 billion, down 5.5 percent from the same period a year ago. Some $315 million of the decrease was due to the fact that Lockheed delivered no commercial telecommunications satellites in 2013, compared with two in 2012.
Another $210 million of the revenue decline was attributed to lower sales relating to NASA’s Orion crew transport vehicle.
Government satellite programs partly offset these declines. While revenue from the Mobile User Objective System (MUOS) of low-data-rate military communications satellites was down $100 million from the previous year, revenue from the Advanced Extremely High Frequency satellite system was up $220 million, the company said in its SEC filing.
Strategic and defensive missiles, which are part of the Space Systems division, reported an increase of $70 million during the nine-month period, mainly because of the Fleet Ballistic Missile program.
Space Systems operating profit, at $790 million, was 13.2 percent of revenue, down marginally from a year ago but still at a level that Lockheed Chief Financial Officer Bruce L. Tanner said is a record high for the division.
For the full year, Lockheed is anticipating a 12.8 percent operating margin.
The operating margin level is remaining high despite the fact that earnings from United Launch Alliance (ULA), the provider of Atlas and Delta rockets to the U.S. government in which Lockheed and Boeing each have a 50 percent stake, are likely to be lower in 2014, Tanner said.
For the nine months ending Sept. 30, equity earnings, mainly from ULA, accounted for 27 percent of the Space Systems division’s operating profit.
Tanner said there are no commercial satellite or commercial launch deliveries scheduled for 2014, but that the division’s profit is expected to remain high. New orders expected by the end of this year include the fifth and sixth SBIRS, or Space Based Infrared System of surveillance satellites, and “a pretty significant extension on the Orion program with NASA,” Tanner said during the conference call.
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