Weak demand hurts General Dynamics earnings

Staff, wire report

General Dynamics Corp. said Wednesday its third-quarter earnings sank nearly 10 percent, hurt by weak demand for business jets, but sales in all of its defense-related segments saw gains, leading the military contractor to boost its profit outlook for the year.

The company has benefited recently from strong demand for equipment like heavily armored vehicles that can protect troops against roadside bombs. It also has contracts to make submarines and warships, such as the Austal-made littoral combat ship, for the Navy.

General Dynamics Corp. now predicts 2009 earnings per share between $6.15 and $6.20. Analysts expect $6.18 per share, according to a survey by Thomson Reuters. The company previously forecast profit of $6.05 to $6.15 per share.

In the third quarter, Falls Church, Va. General Dynamics' profit declined to $572 million, or $1.47 per share, from $634 million, or $1.59 per share, a year earlier. Analysts surveyed by Thomson Reuters expected $1.40 per share, on average.

General Dynamics listed completion of builder's trials this month for the LCS as a milestone, and Jay L. Johnson, president and chief executive, praised the vessel during a conference call with analysts on Wednesday.

"It performed beautifully," he said. "It's fast, it's sleek, it's seaworthy, it's got great capability and we are very impressed with our own ship. I think the customer was satisfied ... because we are now moving into acceptance trials in mid-November."

Johnson noted that construction on the second vessel is under way and that "we look forward to providing lots of (LCSs) to our customer."

(The Press-Register's Kaija Wilkinson and The Associated Press contributed to this report.)