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General Dynamics profit rises 7.3% on higher Gulfstream deliveries

Published 10/23/2019, 09:01 AM
Updated 10/23/2019, 09:04 AM
General Dynamics profit rises 7.3% on higher Gulfstream deliveries

By Mike Stone

(Reuters) - Higher deliveries of Gulfstream jets boosted revenue at U.S. aerospace and defense company General Dynamics Corp (N:GD), which reported a 7.3% rise in quarterly profit on Wednesday, but shares were flat in premarket trading after gaining 2.5% a day earlier.

Revenue from its aerospace unit jumped 23% to $2.5 billion in the third quarter ended Sept. 29, as new Gulfstream deliveries, a key metric for investors, increased to 38, from 27 a year earlier.

The company delivered some of its first G600 jets to customers in August.

Net earnings climbed to $913 million, or $3.14 per share, in the quarter, from $851 million, or $2.85 per share, a year earlier. Wall Street analysts estimated earnings per share of $3.06, according to Refinitiv data.

Revenue rose 7.3% to $9.76 billion.

On Monday, General Dynamic's Gulfstream division unveiled its widely expected G700 long-range jet, in a challenge to Bombardier Inc's (TO:BBDb) flagship Global 7500 aircraft.

Profit margins at the aerospace unit fell nearly three percentage points to 15.8% from 18.5% in the same quarter last year as the company invested in G600 and G700 jet production.

Operating earnings from the Marine Systems unit, which makes ships and submarines for the U.S. Navy, rose to $209 million, a 24% increase compared to the same quarter a year ago.

Combat systems, which makes tanks, saw its revenue go up 14% from last year to $1.7 billion. In July, the U.S. State Department approved the possible sale to Taiwan of 108 of General Dynamics' M1A2T Abrams tanks, angering China.

Also in July, General Dynamics won a $2 billion contract to continue supporting global security, engineering and supply chain missions for the U.S. Department of State.

Total backlog at the end of third quarter 2019 was $67.4 billion, compared with $67.7 billion at the end of the second quarter.

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