Company reports 11% 1st-quarter profit gain

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RICHMOND, Va. (AP) – Defense contractor General Dynamics Corp. said Wednesday its first-quarter profit rose 11 percent on higher defense and business spending, exceeding Wall Street’s expectations.

The Falls Church, Va.-based company said net income in the quarter ended March 31 increased to $374 million, or 92 cents per share, from $336 million, or 83 cents a share, in the year-earlier period.

Earnings from continuing operations were 94 cents per share, which exclude the operations of General Dynamics’ Material Service Corp. That Chicago business unit, which mines stone, sand and gravel for construction use, is being sold to London’s Hanson Plc for an estimated $300 million. The sale is expected to close in the current quarter.

Analysts surveyed by Thomson Financial had estimated earnings of 84 cents a share, which includes stock option costs. But the provider of financial information was reviewing the estimate Wednesday to see whether analysts had included the sale in their projections.

Revenue rose 16 percent to $5.57 billion in the quarter from $4.80 billion in the year-ago period.

General Dynamics said each of its major business groups turned in higher sales results, led by a 30 percent gain in combat systems. The aerospace unit, which makes the Gulfstream aircraft, saw its revenue increase 23 percent, while sales at the informational systems and technology division climbed 13 percent. Marine systems sales were up 5 percent. Maine’s Bath Iron Works is part of that division.

Margins were strong in all of these segments, added Nicholas D. Chabraja, General Dynamics’ chief executive officer.

“Our focus on performance at all levels of the business continues to generate positive results,” Chabraja said.

The company had a large backlog of about $42 billion. Also, almost $2 billion in European contracts for combat vehicles were announced during the first quarter but are not yet included in the backlog figure.

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