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(Reuters) -U.S. defense contractor Lockheed Martin (NYSE:LMT) shares sank in pre-market trading despite reporting better-than-expected third-quarter revenue and profit on Tuesday, as geopolitical tensions fueled sustained demand for its military equipment.
Lockheed shares were down as much as 2.1% due to weak sales in the unit that makes the F-35 fighter jet – before recovering to $436 per share – down only 1% in New York.
The war in Ukraine has prompted restocking arms and ammunition such as shoulder-fired missiles, artillery and other weaponry, providing U.S. defense companies with lucrative Pentagon contracts.
Lockheed’s weapons, such as the guided multiple launch rocket system and Javelin anti-tank missiles, made in conjunction with defense company RTX, have proven critical to Ukraine’s war efforts.
However, Lockheed is still hindered by pandemic-related labor and supply chain disruptions that continue to affect business lines like the aeronautics business which makes the advanced F-35 fighter jet.
“We are still paced by a few key items,” Lockheed’s Chief Operating Officer Frank St. John told Reuters in an interview, such as “processor assemblies, solid-rocket motors, castings and forgings”, though they have seen progress in this last quarter.
As a result, sales at its aeronautics unit, the largest by size, saw a 5.2% decline in the third quarter.
The company last month cut its full-year F-35 jet delivery target on supplier delays but reaffirmed its 2023 financial goals on Tuesday.
Revenue at the Missiles and Fire Control unit, which makes the High Mobility Artillery Rocket System, was $2.94 billion, up 3.8% from a year earlier.
Bethesda, Maryland-based Lockheed posted a net income of $6.73 per share for the quarter ended Sept. 24, beating estimates of $6.67 per share.
Quarterly net sales rose around 1.78% to $16.88 billion, beating Wall Street estimates of $16.74 billion, according to LSEG data.
