UPDATE 2-Northrop misses sales estimates as supply chain issues hamper production
(Adds CFO comments, links to other stories)
By Mike Stone and Shivansh Tiwary
July 28 (Reuters) - Northrop Grumman Corp missed estimates for quarterly sales on Thursday, as sustained labor shortages and global supply chain issues dent deliveries for the U.S. weapons maker.
An acute labor shortage triggered by the Omicron variant of COVID-19 at the beginning of 2022 continues to hamper production and deliveries across the aerospace sector.
Labor challenges were broad-based, Northrop's Chief Financial Officer Dave Keffer said in an interview with Reuters, but "after a fairly flat first quarter in terms of net adds to our headcount, we did add a thousand net employees in the second quarter, particularly late in the quarter," he said.
Northrop's total sales fell to $8.80 billion in the second quarter, below Wall Street estimates of $9.07 billion, as delays from suppliers in deliveries of essential parts for the company's products continued.
Sales at the company's aeronautics unit, which makes military planes, were down 13% at $2.53 billion in the quarter ended June 30.
Northrop, which led the industry team that made NASA's James Webb telescope, reported an 8.4% rise in revenue in its space systems business, party offsetting a fall in total revenue.
Keffer said recent Pentagon contract awards for missile sensing and tracking as well as communications satellites were "good examples of our work in national security space where we really see an outstanding demand environment."
Earlier this month, the U.S. House of Representatives passed a bill paving the way for the defense budget to exceed $800 billion next year, authorizing $37 billion in spending on top of the record $773 billion proposed by President Joe Biden.
The Falls Church, Virginia-based company reaffirmed its full-year outlook for the second time as it expects the labor market to start easing in the second half, projecting sales between $36.20 billion and $36.60 billion, and transaction-adjusted earnings per share in the range of $24.50 to $25.10.
Last week, Northrop's peer Lockheed Martin Corp lowered its 2022 revenue outlook as sales of its F-35 jets took a dip.
Northrop's quarterly adjusted net earnings fell to $946 million, or $6.06 per share, from $1.04 billion, or $6.42 per share, a year ago. (Reporting by Shivansh Tiwary in Bengaluru; Editing by Maju Samuel and David Holmes)
