Northrop Grumman (NOC, Financial), a leading U.S. defense contractor, reported a significant 49% decline in net profit for its first fiscal quarter. This downturn is primarily attributed to cost overruns in the B-21 stealth bomber project. As a result, the company's stock plummeted by approximately 12%, erasing over $10 billion in market value.
Financial results reveal a challenging quarter for Northrop Grumman, with revenue falling 7% year-over-year to $9.47 billion, missing analysts’ expectations of $9.92 billion. Net profit dropped from $944 million to $481 million, and earnings per share fell to $3.32 from $6.32.
The B-21 bomber project is the main culprit behind these financial woes, incurring a $477 million cost overrun in just one quarter. The acceleration of mass production, coupled with rising raw material prices and supply chain disruptions, has significantly increased manufacturing costs.
Despite maintaining its full-year revenue forecast, Northrop Grumman faces potential challenges in its international markets. The EU's "2030 Autonomous Defense Plan" and countries reevaluating military orders due to U.S. tariff policies could impact the company's overseas market share. Analysts caution that if the U.S. government raises import tariffs on steel, the B-21 project's profit margins may suffer further.
