Lockheed Martin cut its 2022 revenue outlook as it warned supply chain disruptions, which weighed on its latest results, would persist for the rest of the year.
“Many companies in our supply chain, including us, were impacted 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 , we have yet to figure out how to recover what has been lost,” chief financial officer Jay Malave told the Financial Times.
The defense contractor lowered its 2022 revenue outlook from $750 million to $65.25 billion as it expected supply chain issues to persist for the rest of the year. Approximately “$550 million of that remained in our aerospace business due to supply chain pressures, as well as some of the program delays we’ve had, particularly [on] the F-16,” Malave said.
“But that said, we are offsetting the earnings impact of lower volume through better margins,” which are now expected to be 11% in 2022, up from 10.9% last year.
Lockheed remains optimistic about the expected increase in global defense spending following the Russian invasion of Ukraine, despite supply problems in the industry.
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 $15.4 billion in revenue. Its profits were weighed down by about $1.4 billion after tax on non-operating expenses, mostly related to its pension fund, as analysts expected more than $16 billion in revenue.
Lockheed shares were down about 5% in premarket trading Tuesday morning.
Net sales of Lockheed’s F-35 fighter jet 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 had run out 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.