Strong demand for business jets and IT services helped General Dynamics notch another forecast-beating quarter of sales and earnings growth.
The aerospace and defence company — best known for its Gulfstream planes — saw its shares jump 3 per cent in pre-market trading as it became the latest to be lifted by the bounceback in the corporate-jet maket.
After a tough couple of years for the industry, demand has taken off again thanks to provisions in President Donald Trump’s 2017 tax reform that allow buyers to deduct 100 per cent of a new or used plane’s cost on their returns.
“Our Aerospace segment successfully managed through a new model transition while achieving good order intake,” said Phebe N. Novakovic, chairman and chief executive.
Revenue in the aerospace division, which makes the business jets, jumped by more than 36 per cent during the fourth quarter to $2.7bn. For the year, sales were up 4 per cent at $8.45bn, making the unit once again the company’s biggest, accounting for over 23 per cent of total group sales.
While General Dynamics is best known as the maker of Gulfstream jets, tanks and Navy ships, it has also in recent years greatly expanded its information systems and technology business, which provides the US government with cyber security systems.
It snapped up IT and cyber security group CSRA for $9.6bn, including debt, last February. Gains from the acquisition helped the division nearly double its sales during the quarter to $2.38bn.
Elsewhere, the marine systems division — which does work for the Navy — reported an 11.5 per cent rise in revenues to $2.29bn. The combat systems unit, which builds armoured vehicles and ammunitions for the Army, and the mission systems unit, which makes secure communications networks for the military, were the main outliers, with sales dipping 0.2 per cent and 0.3 per cent, respectively, during the period.
Overall, General Dynamics took in $10.37bn in sales for the fourth quarter, a 25.4 per cent jump from the prior-year period and ahead of the $10.35bn analysts had expected.
Net income, at $909m, or $3.07 per diluted share, also topped expectations for $888m, or $2.99 a share.
Last week, Textron, the company behind Cessna jets and Bell helicopters, cited strengthening demand for business jets for a better than expected quarterly profit.