(Reuters) – General Dynamics Inc (GD.N) posted a 5.2% quarterly revenue increase on Wednesday as demand for military supplies surged amid geopolitical instability following Russia’s invasion of Ukraine. announced that it did.
An early start in New York after CEO Phoebe Novakovic warned that the investment the company is making to build its latest business jet, the G700, will result in lower-than-expected second-quarter earnings. The stock fell 5.5% to $210.40 during trading. FAA certified by the end of summer.
“We expect to deliver a significant number of G700s in Q3 and Q4. It has an impact and will have an impact in the second quarter.”
Sales for General Dynamics’ aerospace division, which manufactures the Gulfstream jet, declined slightly in the first quarter. Gulfstream delivered 21 aircraft in the first quarter, down from his 25 in the same period last year.
U.S. defense contractors are benefiting as the war in Ukraine and tensions in U.S.-China relations have increased demand for weapons such as tanks, submarines and ammunition.
Orders for General Dynamics’ Combat Systems business unit, which manufactures tanks and munitions, were at their highest level in eight years. The war in Ukraine has caused many militaries to become more concerned with the depth of their ammunition stockpiles.
First quarter revenues of $9.88 billion increased from $9.39 billion a year ago.
However, quarterly earnings remained flat at $730 million as supply chain disruptions and labor shortages continue to hamper production.
Many companies in the aerospace industry have suffered similarly from the effects of the pandemic, especially regarding retention and training of skilled workers.
The company says an “abnormally high turnover rate” of workers has affected its electric boat division, which assembles nuclear submarines.
Revenues in the Marine Systems segment, which builds ships in addition to submarines, increased 12.9% year-on-year, while profits remained flat.
Increased sales resulting from the recently agreed AUKUS submarine contract are still a long way off. However, the first boat in the US Columbia-class submarine fleet is now one-third completed, according to the company.
Reported by Pratyush Thakur of Bangalore.Editing: Shinjini Ganguly
Our standards: Thomson Reuters Trust Principles.