Key insights
- Northrop Grumman's Q1 revenue increased due to strong demand for aeronautics systems and defense systems, driven by global conflicts and Pentagon efforts to rebuild weapons stockpiles. The company is expanding B-21 Raider production and making progress on the Sentinel program. Increased defense spending and government contracts are a tailwind for the company and the broader defense sector, signaling potential positive, but limited, impact on the overall US equity market.
By Mike Stone and Aishwarya Jain
April 21 (Reuters) - Defense supplier Northrop Grumman posted higher first-quarter revenue on Tuesday helped by strong demand for its aeronautics systems, including the B-21 Raider aircraft, amid a rise in global conflicts.
Efforts by the Pentagon to rebuild weapons stockpiles strained by operations linked to Iran and other conflicts have driven strong demand for arms, benefiting defense contractors such as Northrop Grumman.
In February, the firm agreed with the U.S. Air Force to expand nuclear-capable B-21 Raider production capacity by 25% and accelerate deliveries, with the first aircraft scheduled for delivery in 2027.
Prior to the expansion, the Air Force had committed to purchasing at least 100 aircraft, according to its website.
Each aircraft, including support equipment, training and engineering change orders, would cost the Pentagon $692 million in 2022 dollars.
First-quarter sales in Northrop Grumman's aeronautics segment rose 17% to $3.28 billion.
Northrop also posted a rise of 10% in organic sales to $1.9 billion in its defense systems segment, helped by a ramp-up in the Sentinel program, which makes nuclear missiles, as well as higher demand for tactical solid rocket motors.
Sentinel is the land-based leg of the U.S. nuclear triad and will replace Boeing's aging intercontinental ballistic missile Minuteman III, first deployed in 1970. As of 2019, the U.S. had an active force of 400 Minuteman III missiles.
Last week, Northrop said it was achieving "substantial progress" in the Sentinel program, with a first flight expected in 2027 and initial capability in the early 2030s.
The Falls Church, Virginia-based company maintained its 2026 sales forecast of $43.5 to $44 billion. It reported first-quarter revenue of $9.88 billion, 4.4% higher than the $9.47 billion last year.
First quarter per-share profit rose sharply to $6.14 in the quarter from $3.32 a year earlier, after last year’s results were weighed down by a $477 million charge linked to higher manufacturing costs on its B‑21 program.
(Reporting by Aishwarya Jain in Bengaluru; Editing by Devika Syamnath)