Lockheed Martin has warned of persistent supply chain disruptions for the rest of the year © Jason AldenBloomberg
Lockheed Martin cut its 2022 revenue outlook as it warned that supply chain disruptions, which hurt its latest results, will persist for the rest of the year.
“Many companies in our supply chain, including us, were affected by extended absences” during the initial wave of the Omicron variant of Covid-19 “and although we have seen an improvement in the cadence of our operations , still to figure out how to recover what was lost,” CFO Jay Malave told the Financial Times.
The defense contractor cut its 2022 revenue outlook by $750 million to $65.25 billion as it predicted supply chain issues would persist for the rest of the year. About $550 million of that was in our aerospace business because of supply chain pressures as well as some of the program delays that we’ve had, particularly [on] the F-16,” Malave said.
“But that said, we offset the impact of lower volume profits through better margins,” which are now expected to be 11 percent in 2022, up from 10.9 percent last year.
Lockheed remains optimistic about the expected increase in global defense spending in the wake of Russia’s invasion of Ukraine, despite industry-wide supply setbacks.
But its second-quarter results fell short of Wall Street expectations. In the three months ended June 26, Lockheed reported net income of $309 million on revenue of $15.4 billion. Its profit was hit by about $1.4 billion after tax on non-operating charges, mostly related to its pension fund, while analysts had expected more than $16 billion in revenue.
Lockheed shares were down about 5 percent in premarket trading Tuesday morning.
Net sales of Lockheed’s F-35 fighter program fell $945 million in the second quarter, compared to the same period last year.
About $300 million of that was because funding for the program ended and negotiations with the Pentagon for a new contract had not been concluded, Malave said. The remaining sales decline was related to the supply chain.
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