Lockheed Martin (NYSE:LMT) and Raytheon Technologies (NYSE:RTX) on Tuesday blamed supply chain bottlenecks for hindering their ability to increase output after receiving record orders for weapons. The war in Ukraine and tensions with China are driving the demand.
Lockheed (LMT) said finding enough workers has been difficult as the U.S. Department of Defense quickens the pace of buying military equipment for Ukraine. Raytheon (RTX) forecast that production of needed materials won’t return to prepandemic levels until the end of this year at the earliest.
The companies make key armaments that the United States is sending to Ukraine as part of its more than $27 billion in military support. Only $6.6 billion of the total is now under contract, and Lockheed (LMT) and Raytheon (RTX) are the biggest recipients of contract awards.
Among Lockheed’s (LMT) products are Javelin antitank missiles, more than 8,500 of which have been committed to Ukraine. It also collaborates with Raytheon (RTX) on making Himars rocket launchers that have been credited with weakening Russia’s ground forces in Ukraine.
The Pentagon’s plan for higher spending contrasts with the declines in defense sales that Lockheed (LMT) and Raytheon (RTX) saw last year, though there were signs of improvement in the final quarter of the year.
Lockheed’s (LMT) net profit slumped 6.7% from a year earlier to $1.91 billion in Q4, while diluted EPS edged downward by less than 1% to $7.40. Adjusted EPS of $7.79 beat the consensus estimate of $7.37 as revenue rose 7.1% from year earlier to $18.99 billion, ahead of Wall Street’s forecast for $18.25 billion.
The company expects sales of $65,000 to $66,000 in 2023, which is flat with last year. As the supply chain improves, Lockheed (LMT) forecast revenue to grow in 2024. Its backlog expanded in 2023 by about $15 billion to end the year at $150 billion.
Raytheon’s (RTX) net income more than doubled from year earlier to $1.42 billion in Q4, or $0.96 a share. Sales rose 6% to $18.1 billion with significant gains in aircraft engines and parts.