Lockheed Martin cut its 2022 revenue outlook after warning that supply chain disruptions, which weighed on its recent results, will continue for the remainder of the year.
“Many companies in our supply chain, including us, were affected by prolonged shortages” during the initial wave of the Omicron variant of Covid-19 “and while we have seen improvement in the cadence of our operations, we still have to figure out how to recover what has been lost,” chief financial officer 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 problems would continue for the rest of the year. About $550 million of that was down in our aeronautics business because of supply chain pressures as well as some of the program delays that we’ve had, particularly [on] F-16,” Malave said.
“But having said that, we offset the impact of the lower volume profit through better margins,” which are now expected to be 11 percent in 2022, up from 10.9 percent last year.
Lockheed remains bullish on the projected increase in global defense spending following Russia’s invasion of Ukraine, despite supply disruptions across 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 earnings were weighed down by about $1.4 billion after tax of non-operating charges, mostly related to its pension fund, while analysts had expected more than $16 billion in revenue.
Lockheed shares fell about 5 percent in premarket trading Tuesday morning.
Net sales of Lockheed’s F-35 fighter jet program fell $945 million in the second quarter, compared with the same period last year.
About $300 million of that was because funding for the program ran out and negotiations with the Pentagon for a new contract were not completed, Malave said. The remaining sales decline was related to the supply chain.
