PROFITS SOAR IN DEFENSE 51% JUMP FOR NORTHROP; 78% FOR BOEING.

Byline: Gregory J. Wilcox Staff Writer

The defense sector continued to benefit from spending on the war and national security as Northrop Grumman Corp. and Boeing Co. on Wednesday reported big gains in third-quarter income.

Century City-based Northrop Grumman's profit jumped 51 percent in July through September, and Boeing Co.'s soared 78 percent from year-ago levels for the period.

Their reports came a day after Bethesda, Md.-based Lockheed Martin Corp. reported a 41 percent jump in third-quarter profits.

``They've all been good and above expectations in every case,'' analyst Paul H. Nisbet at JSA Research in Newport, R.I., said of defense sector companies' performance in the quarter. ``Growth is generally right around 10 percent top line in the defense parts of their business.''

Northrop Grumman and Boeing are also among companies reaping the rewards of government investment in the nation's future security.

Northrop Grumman's net income during the quarter increased to $278 million, or 76 cents a share, from $184 million or 50 cents in the like period a year ago.

Sales increased 11 percent to $7.4 billion from $6.7 billion for the same period a year ago.

Company officials said net income from continuing operations rose 46 percent to $291 million, or 80 cents a share, from $200 million, 54 cents, a year ago.

``This was a quarter of solid, double-digit growth in sales, operating margins and income and earnings per share from continuing operations,'' Ronald D. Sugar, Northrop Grumman chairman, chief executive officer and president, said during a conference call.

The company also had some big wins during the quarter: a $1 billion contract to continue work on an unmanned air systems combat demonstration program and a $300 million contract for battle management and control systems.

``However next week's election turns out, national security spending will be a high priority as we continue to wage the war on terrorism and securing our homeland,'' Sugar said.

But he said he doesn't think defense spending will continue to grow at the rapid pace of the last few years.

Northrop Grumman will embark on a $1 billion stock buy-back program, he said.

And an effort to hire 2,000 new workers that began in January is now 75 percent complete. It should be finished by year's end. The jobs are at company facilities from the Antelope Valley to San Diego.

``All the aerospace companies are out there quietly hiring. The key here is, for every direct job, there are three other jobs created in the economy,'' said Jack Kyser, chief economist at the Los Angeles County Economic Development Corp.

Officials at Chicago-based Boeing, which has operations in Canoga Park and Long Beach, said surging military sales boosted its bottom line, with defense and space business contributing most of the profits.

Boeing reported net income of $456 million, 56 cents a share, up from $256 million, or 32 cents, a year ago.

Revenues jumped 8 percent to $13.2 billion from $12.2 billion.

Boeing's Seattle-based commercial aircraft business, which also has operations in Long Beach, reported operating earnings of $168 million, even though revenue slipped 8 percent to $4.6 billion because a higher proportion of deliveries in the quarter were the smaller 737 model.

``Our cash flow remains very strong, and we're on track to meet our operating and financial goals for 2004,'' the company president and chief executive officer, Harry Stonecipher, said in a written statement.

Lockheed Martin Corp., the nation's largest defense contractor, presented a similar picture on Tuesday.

The company reported third quarter net income of $307 million, equal to 69 cents per share, up from $217 million, 48 cents per share, a year ago.

Sales increased 4 percent to $8.4 billion from $8.1 billion last year.

Gregory J. Wilcox, [phone]

greg.wilcox(at)dailynews.com

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PROFITING FROM DEFENSE

Source: Company reports