The demand for artillery and armored vehicles, partly driven by the need to replenish supplies delivered to Ukraine, helped offset increased costs. U.S. defense contractor General Dynamics (GD.N) reported third-quarter earnings on Wednesday that topped Wall Street projections.
The Pentagon’s investment in equipment replacements for Ukraine, such as 155-millimeter artillery replacements, crucial to Ukraine’s ground strategy in fending off the Russian invasion, has helped the corporation.
Combat vehicles like Stryker and Abrams tanks, among other weaponry, have already been transferred to Ukraine and are expected to be replenished.
Following the release of its quarterly earnings of $3.04 per share, which is above analyst projections of $2.91, and its 6% sales increase to $10.57 billion, which also exceeded estimates, the Reston, Virginia-based company’s shares increased 4.4%, according to LSEG data.
According to Jason Aiken, chief financial officer of General Dynamics, artillery has “been a big pressure point with Ukraine, one that we’ve been doing everything we can to support our (U.S.) Army customer,” so far.
He said that output has increased from 14,000 rounds per month to 20,000. The ratio of orders received to units shipped and billed, or book-to-bill, for the firm was 1.4 to 1. Sales at the company’s aerospace division, which produces Gulfstream business jets, fell 13.4% due to difficulties with the supply chain that made aircraft delivery more difficult.
Gulfstream fulfilled its commitment to deliver 27 planes this quarter, although it was far fewer than the 35 jets it supplied in the same period last year. Seventy-two business planes have been delivered so far this year.
Aiken stated that it now expects 135 to 137 deliveries in 2023, down from 139 to 140 in July, during a conference call with investors following its results call. For the corporation to deploy its business aircraft, G700 certification is necessary
According to Sheila Kahyaoglu, a Jefferies analyst, “this could still be possible given 40 G700s are built and awaiting certification, and guidance (from management) of 19 G700s” to be manufactured in the fourth quarter. Her note was sent on Wednesday.
“All in, including G700, we anticipate in excess of 60 deliveries in the (fourth) quarter, assuming we’re granted FAA certification before the end of the year,” added Aiken.
Along with other military contractors, Lockheed Martin (LMT.N) and RTX (RTX.N), General Dynamics released better quarterly earnings than anticipated.
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