(Adds details throughout from conference call, background on oil price drop)
WASHINGTON, Jan 26 (Reuters) - Lockheed Martin Corp on Tuesday said commercial helicopter sales for its Sikorsky Aircraft unit this year were expected to be about $375 million, half the level projected last summer, due to the sustained drop in world oil prices.
“I think the biggest change that we are seeing from when we announced this deal is the changes in sort of the OEM helicopter sales in the commercial marketplace, obviously driven by the oil and gas marketplace as we sit here today,” Lockheed Chief Financial Officer Bruce Tanner said in an earnings call.
Lockheed expected the unit’s commercial helicopter sales to be about $750 million, down from a 2014 peak of $1.5 billion, when it announced in July plans to buy the maker of Black Hawk helicopters from United Technologies Corp., Tanner said.
The Bethesda, Maryland-based company closed the $9 billion purchase in November.
But oil prices last week touched 12-year lows under $30 a barrel before staging a modest rally.
Sikorsky sees good prospects for international helicopter sales in areas such as search and rescue and border patrol, which would offset a drop-off in sales to the oil and gas sector. But Tanner said those prospects would not translate into firm orders until after 2016 or 2017, Tanner said.
“You should think of that primarily as the transition from development programs where we are seeing lower margins, therefore, lower cash ... to pure production programs that should be sort of normal cash-generating business,” he said.
Tanner added that he expected Sikorsky to be a larger cash generator than under United Technologies because of Lockheed’s ability to negotiate contacts with the government. Lockheed is the Pentagon’s No. 1 supplier.
“We know the game plan, we know the playbook; we just have to sort of execute it with Sikorsky,” he said.
Lockheed Martin reported fourth-quarter earnings of $3.01 per share on Tuesday. Analysts had on average expected earnings of $2.94 a share, according to Thomson Reuters I/B/E/S.
Shares of Lockheed Martin fell 1.2 percent to $208.40 on the New York Stock Exchange. (Reporting by Idrees Ali and Andrea Shalal; Editing by Chizu Nomiyama and Paul Simao)