Commercial, Military, Public Service

L-M: Gov. Contracting Expertise to Boost Sikorsky’s Bottom Line

By Staff Writer | January 27, 2016
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Lockheed Martin Corp., in a Tuesday report of its fourth-quarter and full-year 2015 earnings, shared more of its plans for its recently acquired rotorcraft subsidiary, Sikorsky. Executive presenters also responded to pointed questions about how Sikorsky might grow in its new home in ways that it might not have under its former parent company.
L-M on Tuesday equated Sikorsky to a roughly $5 billion business on par with its recently restructured Information Systems & Global Solutions division. As L-M had previously reported, the former United Technologies Corp. subsidiary had increased its annual net income in Q1 to Q3 2015, even during the acquisition process that stretched from June to November.
L-M nevertheless had to readjust its financial expectations with the rest of the rotorcraft industry due to the oil price drop. Commercial rotorcraft sales, it said, had peaked at $1.5 billion in 2014. L-M originally expected to see half that much in 2016 but now predicts far lower commercial sales closer to $375 million.
But the company also cited accelerated customer interest from military and search-and-rescue segments in the Middle East, Asia and Eastern Europe, and added that Sikorsky would benefit from L-M’s defense contracting experience. Marillyn Hewson, chairman, president and CEO, explained that L-M (which already maintains military aerospace programs, such as the F-35 Joint Strike Fighter and the unmanned K-MAX with Kaman) has a “better understanding of contracting” and more experience with customers in the U.S. Defense Dept. as well as in international governments. “We already know the game plan and playbook,” said Bruce Tanner, executive VP and CFO. Tanner added that L-M would be a “stronger cash generator” and “bring better innovations.”

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