A drop in production contract volumes on the F-35 fifth generation stealth fighter in 2023 resulted in a $400m decline in net sales for the programme, according to manufacturer and US defence prime Lockheed Martin.
Detailing its 2023 results on 23 January, Lockheed Martin revealed net sales in its Aeronautics business segment increased $487m compared to 2022. In addition, net sales increased by approximately $540m for the ramp up on classified programmes and $230m on the F-16 programme related to the ramp up in production of the long-lived fighter.
However, the reported increases “were partially offset by lower net sales of $400m on the F-35 programme due to lower volume on production contracts partially offset by higher volume on sustainment and development contracts”, Lockheed Martin stated.
Unlinked to the company’s financial results, on 24 January the US Naval Air Systems Command awarded Lockheed Martin Aeronautics a near-$8.4m firm-fixed-price modification to a previously awarded contract, adding scope to procure “diminishing manufacturing sources in support of production, retrofit, spares, replenishment and repairs for the F-35 Lightning II programme for the Air Force, Marine Corps, Navy, Foreign Military Sales customers, and non-US Department of Defense participants”.
The F-35 fighter is the largest military combat aircraft endeavour ever created, and is becoming the standard Nato fixed-wing fighter as one country after another signs up to the programme.
Higher volumes drives classified net sales
Overall, Aeronautics’ net sales in Q4 2023 were comparable to the same period in 2022, while net sales on the F-35 programme decreased $275m due to lower volume on production contracts, partially offset by higher volume on development and sustainment contracts.
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Net sales increased on classified programmes by $180m driven by higher volume and increased on the F-16 programme by $65m due to the ramp up on production, Lockheed Martin reported.
The Aeronautics division’s operating profit in Q4 2023 decreased $55m, or 7%, compared to the same period in 2022. Lockheed Martin attributed the decrease primarily to lower operating profit of $50m on the F-35 programme due to the lower cost throughput and lower net favourable profit adjustments on production contracts.
Through 2023, Aeronautics’ operating profit decreased $42m, or 1%, compared to 2022, attributed primarily to lower operating profit of $100m on the F-22 programme due to lower net favorable profit adjustments and $95m on the F-35 program due to lower net favorable profit adjustments on production contracts.
These decreases were partially offset by higher operating profit of $115m on classified programmes due to higher net favorable profit adjustments and the impact of the higher sales as discussed above, stated Lockheed Martin. Total net profit booking rate adjustments were $180m lower in 2023 compared to 2022.