CHICAGO — Lockheed Martin shares declined after the company forecast an annual profit below analysts’ estimates as the largest government contractor contends with constrained defense spending.
Earnings per share will be $10.80 to $11.10 this year, the Bethesda, Md.-based company said in a statement. That’s less than the $11.46 average estimate of 20 analysts, according to data compiled by Bloomberg.
The company’s forecast for the year will be watched closely as a potential bellwether for other defense contractors, Neal Dihora, an analyst with Morningstar Inc., said in an e-mail before results were announced. Shares fell 2.6 percent to close at $190.55 Tuesday.
Lockheed forecast net operating profit of $5.3 billion to $5.5 billion, lower than the $5.6 billion analysts had estimated. The company faces headwinds from a declining discount rate that could reduce pension income, and the exclusion of a tax credit that bolstered fourth-quarter profits.
The company expects pension adjustments to boost income by $475 million in 2015, down from the $650 million it expected at the end of the third quarter. Since then the discount rate used to measure pension obligations has declined to 4 percent from 4.25 percent, Lockheed said.
Fourth-quarter sales rose 8.6 percent to $12.5 billion, ending a streak of nine quarterly declines.
International orders historically have been concentrated during the final reporting period of the year, providing a boost to U.S. defense contractors such as Lockheed with large overseas sales, Douglas Harned, a New York-based analyst with Sanford C. Bernstein & Co., said in a Friday report.
