By Mike Stone and Ashwini Raj

(Reuters) – U.S. weapons maker Northrop Grumman Corp reported a fall in first-quarter sales and adjusted profit on Thursday, hit by labor shortages and supply chain issues.

An acute labor shortage due to the Omicron-led surge in coronavirus infections led to demand for workers far outpacing supply.

Chief Executive Officer Kathy Warden in the company’s last earnings call warned that Northrop had been seeing COVID-related effects on its labor and supply chain, especially in the aeronautics sector.

The company reported a 9.6% decline in revenue from its aeronautics unit, which makes the center fuselage for fighter jets.

However, Russia’s invasion of Ukraine in February has boosted defense spending demand in the U.S. as well as other countries as they shore up their defenses.

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

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

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

Sales in Northrop’s space systems business gained 13.2% to $2.86 billion, its third consecutive quarterly rise.

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

Quarterly adjusted net earnings 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.

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