Northrop Announces Lower Revenue as Labor and Supply Chain Issues Persist

A Northrop Grumman building is shown in El Segundo, California, U.S., February 7, 2019. REUTERS/Mike Blake/File Photo

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April 28 (Reuters) – U.S. arms maker Northrop Grumman Corp (NOC.N) reported lower first-quarter sales and adjusted profit on Thursday, hit by labor shortages and problems of supply chain.

An acute labor shortage due to the spike in coronavirus infections caused by Omicron has resulted in demand for workers far exceeding supply.

President and CEO Kathy Warden on the company’s latest earnings call warned that Northrop had seen COVID-related effects on its workforce and supply chain, particularly in the aeronautical sector.

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The company reported a 9.6% drop in revenue from its aerospace unit, which manufactures the center fuselage of fighter jets.

However, Russia’s invasion of Ukraine in February has spurred demand for defense spending in the United States as well as other countries as they strengthen their defenses.

US President Joe Biden’s $5.79 trillion budget plan submitted to Congress last month includes calls for record peacetime military spending of $813 billion, up from $778 billion last year. Read more

The company maintained its guidance for 2022, reporting sustained demand for its products, helped by rising geopolitical tensions, with forecast sales of between $36.20 billion and $36.60 billion.

He continues to expect full-year adjusted earnings per share of between $24.50 and $25.10.

Sales for Northrop’s space systems business rose 13.2% to $2.86 billion, its third consecutive quarterly increase.

The company’s sale of its IT services in early 2021 also led to lower sales and profits in the first quarter, the company added.

Quarterly adjusted net income fell to $955 million, or $6.10 per share, from about $1.08 billion, or $6.57 per share, a year ago.

The company’s total sales fell to $8.80 billion in the first quarter from $9.16 billion a year earlier.

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Reporting by Ashwini Raj in Bengaluru; Editing by Amy Caren Daniel

Our standards: The Thomson Reuters Trust Principles.

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