Lockheed Martin profit tops estimates

By Karen Jacobs

ATLANTA (Reuters) - Lockheed Martin Corp (LMT.N), the top defense contractor, reported a lower first-quarter profit on Tuesday as higher pension costs offset rising sales.

But results were better than expected, aided by a lower share count, and Lockheed raised its full-year forecast, citing effects of share repurchases.

The company said second-quarter revenue growth would likely lag that of the first quarter, and its shares pared some of their earlier gains to close up 0.4 percent.

"We're probably going to see a lower second quarter than a lot of people are expecting and then probably more rapid growth in the second half of the year," Chief Financial Officer Bruce Tanner said during the earnings conference call.

Specifically, Tanner said growth in electronics systems sales would likely be lower in the second quarter as the year-ago quarter was boosted by sales of air defense and tactical missile products at a level not expected to be repeated. He also said growth in space systems could be down from the year-ago second period.

In the first quarter, the electronic systems, information systems and global services and space systems segments had higher sales, but sales fell 1 percent in aeronautics. All segments except space systems had higher operating profit.

Lockheed has remained profitable in the recession as the U.S. government continued to purchase equipment. But investors are concerned how the defense sector will fare given recent government proposals that would scale back key programs, such as Lockheed's F-22 fighter plane.

Tanner said that if recent proposals from Defense Secretary Robert Gates went on to win congressional approval, the company expects no change to its 2009 forecast and should be able to post "year-over-year" growth.