General Dynamics says its second-quarter net income fell 3 percent, and the defense contractor that runs the Electric Boat shipyard in Groton cut its 2012 profit prediction due to contract delays in its IT business, The Associated Press reports.
The entire defense industry is under a cloud because of the potential for big military spending cuts in January. The cuts, which will be automatic unless Congress agrees to an alternative for cutting the deficit, would slash $492 billion from military budgets over a decade. The government would also cut domestic spending by $492 billion over 10 years.
The Falls Church, Va., company earned $634 million in the April-June period, down from $653 million a year ago. On a per-share basis, profit rose to $1.77 from $1.76 because the company had less stock outstanding, which boosts the value of each individual share.
Analysts expected a profit of $1.74 per share, according to a FactSet poll.
Revenue rose less than 1 percent to $7.92 billion from $7.88 billion, in line with analyst estimates. Revenue from the information technology division slid 10 percent to $2.53 billion, hurt by delays in contracts for a division that makes communications products for the military and government. Profit in that division shrank by nearly a quarter.
General Dynamics said it’s likely such delays will continue in the second half of the year, and cut its forecast range for the year’s profit by 10 cents to $7 to $7.10 per share. Analysts expect $7.16 per share.
The company’s revenue from sales of combat systems rose just 1 percent to $2.15 billion, as the government cut back on defense spending.
The aerospace division’s revenue rose 16 percent to $1.59 billion, while marine systems revenue grew 5 percent to $1.65 billion.
