General Dynamics 3Q profit falls on low jet demand

DONNA BORAK AP Business Writer

WASHINGTON (AP) - 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 experienced sales gains, leading the military contractor to boost its profit outlook for the year.

The company has benefited recently from strong demand from the Pentagon for equipment like heavily armored vehicles that can protect troops against roadside bombs. It also has big contracts to make submarines and warships for the Navy.

General Dynamics Corp. now predicts 2009 earnings per share between $6.15 and $6.20 per share. 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. Earnings from continuing operations were $1.48 per share, down from $1.60 per share in the year-ago period. The company is selling a nitrocellulose plant in Spain and is reporting costs related to it as discontinued operations until the sale is complete.

Revenue grew 8.1 percent to $7.72 billion led by the company's combat systems division, which builds the Stryker armored wheeled vehicle. That fell below Wall Street's forecast of $7.75 billion.

In the July-September period, total unfilled orders rose nearly 10 percent to $66.25 billion from a year earlier. In the quarter, the contractor also received a $950 million Army contract for services for the Stryker vehicle.

Sales grew in all three of the company's defense-related businesses helping to offset fewer orders for business jets in its Gulfstream Aerospace unit.

The company's division that makes military vehicles and armaments posted a 26.9 percent gain in sales to $2.35 billion, while its information systems and technology saw sales grow nearly 9 percent to $2.73 billion.

Sales at Gulfstream fell 18.4 percent to $1.12 billion, while the segment's operating profit fell 55.5 percent to $125 million as the number of aircraft it delivered slipped to 17 from 39 in the same period last year.

In morning trading, shares fell 31 cents to $65.47.