General Dynamics’ second-quarter profit and revenue topped analyst estimates, driven by robust orders in its marine segment from Columbia- and Virginia-class submarine programs, boosting shares 5% in early trading.
The defense company’s nuclear-powered submarine-making marine systems segment produced 22.2% more revenue. The unit is now expected to generate 2025 revenue of $15.6 billion with a 7% margin.
During the quarter, the Pentagon modified a submarine production contract awarded to the company’s marine segment, raising the value by $1.85 billion.
The company entered into a new contract with union members at its submarine-making unit, averting a shortage of skilled labor that has contributed to delays in U.S. Navy shipbuilding schedules.
The technologies segment, which makes products for a range of military, intelligence, federal civilian, and state customers, generated 5.5% more revenue year-on-year.
Defense manufacturers benefited from strong demand for weapons and other military equipment during the quarter, owing to geopolitical uncertainty and ongoing conflicts in the Middle East.
New bookings during the quarter were 2.4 times its billing for General Dynamics’ defense segments, indicating a strong order book.
However, revenue within the combat systems part of the defense business, which manufactures land combat vehicles, weapons systems, and munitions, edged down 0.2% after taking a hit from the cancellation of the M10 Booker contract by the Pentagon as well as production delays owing to supply chain woes.
Annual revenue in the combat segment is forecast to be $9.2 billion with a 14.5% margin.
The Reston, Virginia-based company’s quarterly adjusted profit was $3.74 per share, compared with analysts’ estimates of $3.53 per share, according to data compiled by LSEG.
It expects profit for the year to range between $15.05 and $15.15 per share.
(Reuters)
