Surging sales of Gulfstream business jets helped General Dynamics offset declining revenues in combat systems and pushed second quarter profits beyond analysts’ expectations, company CEO Phebe Novakovic said Wednesday.
The aerospace and defense company earned $640 million, or $1.81 per share, up from $634 million, or $1.77 per share, in the same quarter of 2012. Revenue was nearly unchanged at $7.92 billion.
Wall Street, concerned about the effect of federal budget cuts to defense spending, had predicted declines, projecting a profit of $1.62 per share on $7.72 billion in revenue, according to FactSet.
While second-quarter sales in General Dynamics’ combat systems business segment did, in fact, drop 28 percent to $1.55 billion, aerospace sales rose 29 percent to a little over $2 billion. Sales in the company’s marine systems and information technology segments also grew.
Novakovic characterized the second quarter for her company’s aerospace segment as “powerful,” due primarily to a “superb performance” by Savannah-based Gulfstream Aerospace.
The company received orders for every Gulfstream model in the second quarter, demonstrating continued demand across its portfolio of business-jet products, Novakovic said.
In the second quarter, 80 percent of large-cabin orders were for the G450 and G550 models, with those two accounting for 50 percent of the overall orders in the first half of 2013.
“Orders are up in the U.S. market,” Novakovic said, adding that the geographic distribution of the order book represented a good balance with minimal risk.
Sterne Agee analyst Peter Arment said General Dynamics had a quarter, with aerospace operating margins at 18.9 percent, significantly higher than projections of 16.5 percent.
Gulfstream delivered 30 large-cabin aircraft in the second quarter versus 24 in the same quarter of 2012.
“Aerospace funded backlog was down 3.8 percent to $14.5 billion, which is to be expected as G650’s are delivered,” Arment said.