Northrop Grumman expects strong 2023 revenue on weapon demand surge

US defense contractor Northrop Grumman Corp on Thursday forecast full-year sales above Wall Street estimates, as it benefits from strong demand for weapons from countries ramping up their defense spend.

The United States and its allies have been buying more arms and ammunitions and supporting Ukraine with billions of dollar in military aid after Russia invaded the country last year.

During the quarter, Northrop rolled out its new B-21 Raider jet, the first of a new fleet of long-range stealth nuclear bombers for the United States Air Force.

"We're raising our sales outlook for 2023 and expect to deliver strong multi-year cash flow growth," Northrop Grumman Chief Executive Kathy Warden said.

The Falls Church, Virginia-based company expects 2023 sales between US$38 billion and US$38.4 billion, ahead of the average analyst estimate of US$37.86 billion, and an adjusted profit of US$21.85 to US$22.45 per share, as compared to the estimates of US$22.30, according to Refinitiv IBES data.

Meanwhile, rivals General Dynamics Corp and Lockheed Martin Corp forecast their annual profit below estimates, as the industry grapples with labor and supply shortages.

Northrop, which produces the fuselage for the F/A-18 Super Hornet fighter jet, posted sales of about US$10.03 billion for the quarter ended December 31, 2022, ahead of analysts' average estimate of US$9.66 billion.

Sales in its space systems unit, which makes satellites and payloads, jumped 23% to US$3.28 billion, helped by higher investments towards space exploration projects.

Sale in its defense unit, which makes integrated battle management systems, weapons systems, rose to US$1.66 billion, from US$1.38 billion.

Overall adjusted net income stood at US$7.50 per share, ahead of analysts' average estimate of US$6.57 per share.

 

 

 

 

US military-industrial complexes the biggest beneficiary of Afghan war

Brown University’s Costs of War Project released a new report Monday, detailing post-9/11 spending by the Pentagon. The study found that of the over US$14 trillion spent by the Pentagon since the start of the war in Afghanistan, one-third to one-half went to private military contractors.

The report, authored by William Hartung of the Center for International Policy, said US$4.4 trillion of the total spending went towards weapons procurement and research and development, a category that directly benefits corporate military contractors. Private contractors are also paid through other funds, like operations and maintenance, but those numbers are harder to determine.

Out of the US$4.4 trillion, the top five US weapons makers — Lockheed Martin, Boeing, General Dynamics, Raytheon, and Northrop Grumman — received US$2.2 trillion, almost half. To put these huge numbers into perspective, the report pointed out that in the 2020 fiscal year, Lockheed Martin received US$75 billion in Pentagon contracts, compared to the combined US$44 billion budget for the State Department and USAID that same year.

Besides getting paid for weapons and research, US corporations profit from private contractors that are deployed to warzones. The most notorious private security contractor previously employed by the Pentagon is Blackwater, the mercenary group whose employees massacred 17 people in Iraq’s Nisour Square back in 2007.

Besides armed mercenaries, the Pentagon employed private contractors for just about every task in US warzones. Demonstrating the Pentagon’s reliance on contractors, at the end of the Trump administration, only 2,500 US troops were left in Afghanistan, but over 18,000 Pentagon contractors were still in the country.

The report explained how China is the new justification for military spending. “The most likely impact of the shift towards China will be to further tighten the grip of major weapons makers like Northrop Grumman, Lockheed Martin, General Dynamics, and Raytheon Technologies on the Pentagon budget,” the report reads.