RTN Raytheon Co

By Doug Cameron 

Raytheon Co. on Thursday reported higher sales alongside a sharp drop in first-quarter profit as the U.S. defense company flagged strong demand from the U.S., Middle East and North Africa.

Profit fell 27% on a tough comparison from a year ago but exceeded internal expectations and those of analysts, and orders in the quarter swelled by more than a third.

Raytheon follows other large U.S. defense companies reporting this week with an upbeat outlook that included higher full-year profit guidance and a return to organic growth on the back of rising Pentagon and overseas business.

The company reported net profit of $405 million for the quarter, compared with $554 million a year earlier, with per-share earnings dipping to $1.43 from $1.79 as sales rose 9% to $5.8 billion.

Raytheon Co. has boosted output of precision weapons and has capacity to produce more as the U.S. and its allies tackle a shortage of munitions for campaigns in the Middle East. Most of the profit decline reflected one-off contract payments a year earlier, though the latest quarter included a $36 million charge on an overseas program.

The maker of Paveway laser-guided bombs and Tomahawk missiles has joined other defense companies including Boeing Co. and Lockheed Martin Corp. in expanded production for the Pentagon, while countries including Australia and Iraq are seeking thousands of bombs and missiles.

Raytheon is the most export-driven of the major U.S. companies, with overseas sales reaching a record 31% last year, while domestic revenue rose for the first time since 2009.

The company said in January that there has been no impact on demand from oil-dependent nations in the wake of falling energy prices, echoing comments this week from executives at most other contractors, though Lockheed flagged a possible delay to a big missile-defense deal with Qatar.

Raytheon retained its forecast for revenue to climb to between $24 billion and $24.5 billion in 2016 -- compared with $23.2 billion last year -- with per-share earnings ranging from $6.93 to $7.13, up 13 cents from prior guidance on a lower tax charge.

The company is also betting it can leverage the cybersecurity skills it honed for the U.S. military and intelligence agencies to sell to banks and retailers, investing almost $1.7 billion last year to establish a stand-alone business -- rebranded as Forcepoint -- in an area where its defense peers have struggled to make money.

Write to Doug Cameron at doug.cameron@wsj.com

(END) Dow Jones Newswires

April 28, 2016 07:14 ET (11:14 GMT)

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