U.S. defense contractor Lockheed Martin shares sank in pre-market trading despite reporting better-than-expected third-quarter revenue and profit on Tuesday, as geopolitical tensions fueled sustained demand for its military equipment.
Lockheed shares were down as much as 2.1% due to weak sales in the unit that makes the F-35 fighter jet - before recovering to $436 per share - down only 1% in New York.
The war in Ukraine has prompted restocking arms and ammunition such as shoulder-fired missiles, artillery and other weaponry, providing U.S. defense companies with lucrative Pentagon contracts.
Lockheed's weapons, such as the guided multiple launch rocket system and Javelin anti-tank missiles, made in conjunction with defense company RTX have proven critical to Ukraine's war efforts.
However, Lockheed is still hindered by pandemic-related labor and supply chain disruptions that continue to affect business lines like the aeronautics business which makes the advanced F-35 fighter jet.
U.S. Air Force F-35 Lightning IIs from the 356th Fighter Squadron at Eielson Air Force Base fly side by side with Republic of Korea Air Force F-35s from the 151st and 152nd Combat Flight Squadrons as part of a bilateral exercise over the Yellow Sea, ((U.S. Air Force photo by Senior Airman Trevor Gordnier / 51st Fighter Wing /DVIDS) / Fox News)
"We are still paced by a few key items," Lockheed's Chief Operating Officer Frank St. John told Reuters in an interview, such as "processor assemblies, solid-rocket motors, castings and forgings", though they have seen progress in this last quarter.
As a result, sales at its aeronautics unit, the largest by size, saw a 5.2% decline in the third quarter.
The new Defiant X helicopter from Lockheed Martin-Sikorsky and Boeing, via the Defense Visual Information Distribution Service. (Lockheed-Sikorsky and Boeing / Fox News)
The company last month cut its full-year F-35 jet delivery target on supplier delays but reaffirmed its 2023 financial goals on Tuesday.