Lockheed Martin, the world's largest military company and US defense contractor, released its 2024 performance guidance on Tuesday, lower than Wall Street's expectations, and warned that supply chain difficulties could lead to a decline in profits. During the US stock market session, Lockheed Martin's stock price fell by over 4%.
With the outbreak of the Russia-Ukraine conflict, the Palestine Israel conflict, and the Red Sea crisis, the risk of global geopolitical situation is rising, driving the order volume of large military enterprises to increase significantly. However, with continuous supply chain disruptions and labor shortages, many European and American military companies have struggled to significantly increase production capacity.
Lockheed CEO Jim Taiclet stated that the manufacturing of F-35 fighter jets is facing supply chain disruptions and may continue until the third quarter of this year. The company previously claimed that its production speed was affected by insufficient supply of processor components, solid rocket engines, castings, and forgings, with its F-35 project being the hardest hit.
On Tuesday, according to its financial report, Lockheed's net sales for the fourth quarter of last year were $18.87 billion, exceeding market estimates of $17.94 billion. The adjusted earnings per share for the fourth quarter were $7.58.
Taislet pointed out that the stable performance in 2023 reflects strong demand in the market for Lockheed's comprehensive portfolio of advanced defense technology solutions, with a record backlog of orders reaching $160.6 billion, and annual sales increasing by 2% year-on-year to $67.6 billion.
During a conference call after the financial report was released, Taiclet stated that the net sales of the F-35 project decreased by $275 million compared to the same period last year, as some payments were delayed for several months due to the need for final testing and approval for software updates on the recently manufactured aircraft.
Some analysts are concerned about the risk of supply chain disruptions, as they are concerned that this risk is unlikely to dissipate quickly. Lockheed's profits are seen as a barometer for the weapons and military services industry. Competitors Northrop Grumman and General Dynamics will report quarterly performance later this week.
Lockheed also expects earnings per share in 2024 to be between $25.65 and $26.35, while analysts expect an average earnings of $26.62. It is expected that sales in 2024 will be between $68.5 billion and $70 billion, higher than the average analyst expectation of $68.66 billion.
The company's CFO, Jay Malawi, stated in an interview that capital expenditures will remain at a high level in 2024 as the company will continue to invest in the production of high demand weapon systems in Ukraine, such as Guided Multiple Rocket Launch Systems (GMLRS) and Hamas rocket launcher systems.