U.S. contractors’ investments in overseas markets and other business segments this year should help offset the impact of weak domestic orders and defense spending limits, The Washington Post reported Monday.
Amrita Jayakumar writes that General Dynamics, Lockheed Martin and Northrop Grummanposted stronger profits in the companies’ earnings reports for the first quarter of 2014 but saw a drop in information technology sales.
General Dynamics has announced it received a $10 billion training contract from Canada’s commercial contractor.
Wes Bush, Northrop CEO, told investors that international orders accounted for 14 percent of the firm’s year-end backlog in Q1.
The company is banking on strong customer interest in its Triton and Global Hawk drones to help drive growth this year, according to Jayakumar’s article.
Lockheed has been diversifying into other areas such as cybersecurity, agriculture and flight training.
Defense analyst Loren Thompson predicts that General Dynamics’ aerospace business will remain a key driver of future returns for the company.
The Post reports that analysts also forecast that industry will experience growth in IT segments again beginning in at least 2015.
“We're going to be reaching the bottom pretty soon if we haven't already,“ said Jason Gursky, analyst with Citigroup, according to The Post.
Jayakumar writes that investors can expect bigger returns from the industry this year and likely will have extra cash in hand to spend.