(Reuters) -General Dynamics on Wednesday lifted its annual revenue forecast as demand for business jets and military equipment stays resilient, sending its shares up 3% at midday.
Demand for business jets from U.S. corporations remains buoyant despite a recovery in commercial flights and pressure from environmentalists over emissions.
“It’s the Fortune 500 that are really driving the demand (for business jets). These are long-established customers as well as new customers,” Chief Executive Officer Phebe Novakovic said on a post-earnings call.
The Gulfstream G650 maker now expects 2023 revenue of about $42.45 billion, compared to its previous expectations of $41.2 billion to $41.3 billion.
The company expects to deliver five to six aircraft less than its earlier forecast of 145 jets in 2023, as supply chain issues and labor shortages hobble production but the CEO said there was “relief” in sight.
The aerospace segment booked $2.5 billion in new orders during the quarter, driven by strong demand for the company’s Gulfstream business aircraft.
The company’s book-to-bill ratio, which is the ratio of orders received to units shipped and billed, was 1.2-to-1.
General Dynamics also benefited from robust demand for weapons, driven by simmering geopolitical tensions in the Indo-Pacific region, conflict in Ukraine and military modernization efforts of ally countries.
Sales at the marine systems segment, which makes ships in addition to submarines, rose 15.4%. The company forecasts revenue in the segment to rise between $900 million and $1 billion to $11 billion in the year.
Total revenue at the Reston, Virginia-based company for the second quarter rose 10.5% to $10.15 billion, compared to a Wall Street consensus of $9.45 billion.
Net earnings came in at $744 million, or $2.70 per share, ahead of analysts’ average estimates of $2.54, according to Refinitiv data.
(Reporting by Pratyush Thakur in Bengaluru; Editing by Shilpi Majumdar and Maju Samuel)
