Raytheon's Profit Falls 15% in Third Quarter

Raytheon Co. on Thursday reported a 15% slide in third-quarter profit, although the U.S. defense contractor boosted its full-year sales guidance as it digested the purchase of a commercial cybersecurity provider.

Raytheon left its 2015 profit guidance unchanged, unlike rivals Lockheed Martin Corp. and Boeing Co., though operating cash flow in the quarter almost trebled to $1.1 billion. It expects net sales for the full year between $23 billion and $23.3 billion, up from its previous forecast of $22.7 billion to $23.2 billion.

The maker of Tomahawk missiles and the market-leading Patriot missile-defense system has differentiated itself from peers by winning more export deals and pursuing commercial cyber work in the wake of attacks on government systems, financial-service providers and retailers. However, Raytheon has struggled to convince investors that the enlarged cybersecurity business can boost profits.

Lockheed, Northrop Grumman Corp. and others have focused relatively more of their free cash on share buybacks and higher dividends.

Raytheon is betting it can leverage the cybersecurity skills it honed for the U.S. military and intelligence agencies to sell to banks and retailers, investing almost $1.7 billion earlier this year to establish a stand-alone business in an area where its defense peers have struggled to make money.

The company bought control of Websense Inc. from private-equity firm Vista Partners LLC in April. Raytheon said Websense, which has 21,000 data-security clients, half of them overseas, will form the core of a new cyber joint venture with forecast sales of $500 million this year and margins of around 20%.

The Austin, Texas, cyber unit delivered margins of 17.5% in the third quarter compared with 16.7% a year earlier, the best of Raytheon's five divisions, three of which reported lower operating profits.

Net profits fell to $443 million in the three months to Sept. 27 from $519 million a year earlier, with per-share earnings slipping to $1.47 from $1.66. Sales rose to $5.8 billion from $5.5 billion.

Write to Doug Cameron at doug.cameron@wsj.com

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(END) Dow Jones Newswires

October 22, 2015 08:05 ET (12:05 GMT)

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