Middle East Contracts Loss Hit Lockheed Martin Q1 Earnings

Lockheed Martin booked $184M in charges on two Middle East contracts, in a move that highlights the potential pitfalls of the overseas deals that have been driving growth for US defense contractors.

Lockheed Martin took charges on a new missile-defense system being developed for the UAE and an Abu Dhabi-based aircraft maintenance joint venture, ending a multi-quarter run of earnings beats, the company said in a statement Tuesday.

Marillyn Hewson, Lockheed's chief executive, acknowledged the dent to the company's first quarter earnings from the $184 million in Middle East charges, but said she remained optimistic both ventures could still trigger future sales growth.

Lockheed still expects profit margins on its F-35 combat jet to continue rising, even as it pursues an effort to cut the cost of the most popular model to $80 million over the next several years.

Overseas defense budgets in general have been growing faster than Pentagon spending, especially in the Middle East and Asia. Investors have recently become more cautious about the upward trajectory of domestic outlays under President Donald Trump.