Lockheed Martin Sees Uptick In Defense Spending

Lockheed Martin executives on Tuesday said they were upbeat about domestic and international defense sales in the year ahead. In a conference call with reporters to discuss fourth-quarter results, CEO Marillyn Hewson noted that the two-year bipartisan budget agreement provides a “$25 billion annual increase above the previously planned” budget plan. It’s a recognition by Congress “of increasing global security requirements and the need to allocate additional fiscal resources to respond to the threat,” she said. Hewson noted a “double-digit increase in investment accounts,” ranging from “the need to replace aging equipment” to research and development. The company’s 2015 net sales of $46.1 billion was up from $45.6 billion in 2014. The addition? of 11 F-35s to the Fiscal 2016 omnibus spending bill marks the first time in the program that the baseline order has been increased, Hewson pointed out. The F-35 is the company’s biggest program. Lockheed expects that half of new F-35 orders will be from overseas buyers. Other big exports will be the Theater High Altitude Defense (THAAD) missile defense system for Qatar, and weapons and sensor pods needed for the current fights in the Middle East. A C-130 multiyear buy will ensure that airplane stays in production into 2019. Though the company expects to recoup some costs for “over and above” work on the C-5M upgrade, it hasn’t yet counted any additional monies coming from that program. Lockheed also doesn’t expect to have to spend a lot of its own money on developing a replacement for the Russian RD-180 rocket motor, officials said. Lockheed has a $100 billion backlog of business, of which $16 billion stems from its recently acquired Sikorsky unit. (Lockheed Martin fourth quarter and full-year results.)