Weapons maker Northrop forecasts 2017 earnings below estimates

By Ankit Ajmera

REUTERS - Northrop Grumman Corp, a supplier of parts to the F-35 jets, forecast 2017 earnings per share below Street estimates due to lower segment operating margins, which some analysts attributed to costs related to certain of its new programs.

Shares of the company, which reported a better-than-expected quarterly profit, were down 2.3 percent at $225.57 in morning trading on Thursday.

Northrop, which also makes the Global Hawk surveillance planes, forecast 2017 segment operating margin in the mid-11 percent range, lower than last year's 12 percent.

"This may reflect margin headwind from B-21 ramp and perhaps possibly conservative assumptions on other new programs at mission systems," Cowen & Co analyst Cai von Rumohr wrote in a note to clients.

Northrop in 2015 won the contract to produce the "Raider", the U.S. Air Force's new B-21 long-range bomber.

The estimated $80 billion program, expected to produce 100 aircraft, has been shrouded in secrecy since its inception.

The company is expected to have aircraft ready for combat no sooner than 2025.

Northrop also supplies the center fuselage for the F-35 jets, a program that has been criticized as being too expensive by President Donald Trump.

Lockheed Martin Corp, the main contractor for the F-35 program, and Pentagon were poised to bring the price per plane to below $100 million for the first time, Reuters reported earlier this month.

Northrop on Thursday projected 2017 earnings of $11.30-$11.60 per share and sales of about $25 billion.

Analysts on average had expected earnings of $12.23 per share and revenue of $25.03 billion, according to Thomson Reuters I/B/E/S.

Sales in Northrop's aerospace systems business, which also makes drones and spacecraft, rose 19.7 percent to $2.87 billion in the fourth quarter ended Dec. 31.

The aerospace systems division is Northrop's second biggest and contributed 44.2 percent to its 2016 sales.

Sales in Northrop's mission systems unit, its biggest, rose 9 percent to $2.85 billion. The unit makes the F-35 fire control radar, combat avionics and a variety of defense electronics.

Northrop's net earnings rose to $525 million, or $2.96 per share, from $459 million, or $2.49 per share, a year earlier.

Total sales rose 12.3 percent to $6.40 billion.

Analysts had expected earnings of $2.49 per share and revenue of $5.93 billion.

(Reporting by Ankit Ajmera in Bengaluru; Editing by Martina D'Couto and Sriraj Kalluvila)