- The Washington Times - Tuesday, February 4, 2003

Shares of United Defense Industries, an Arlington weapons defense company, continued to show steady growth in its first public year, despite the loss of a major contract from the Pentagon last year.
United Defense, controlled by the Carlyle Group of Washington, absorbed a substantial loss, 20 percent of sales, when the U.S. Army canceled the $2 billion Crusader-artillery program in August, company spokesman Doug Coffey said.
"It always hurts to see a good program like the Crusader get terminated, but we've moved the technology we were using in the Crusader program to other Army contracts, in addition to stepping up work for the Navy's gun systems," Mr. Coffey said.
The company also picked up more contract sales in the fourth quarter ended Dec. 31 with the acquisition of U.S. Marine Repair, a Norfolk maintenance company for the U.S. Navy, six months ago.
Sales rose 29 percent to $521.2 million from $404.6 million a year earlier, pushing United Defense's income to $43.2 million (84 cents per share) from $6 million (14 cents) in 2001.
For the year, profits surged to $134.6 million ($2.62) from $8.8 million (21 cents) in the 2001 period.
U.S. Marine Repair brought in a good chunk of the sales growth, 29 percent for the fourth quarter and 75 percent for the year, but Mr. Coffey said United Defense would work to balance its business segments.
"We certainly see U.S. Marine Repair as having a positive performance in the future, but we're not counting on it to bring in that much revenue each quarter," he said.
The disintegration of the Space Shuttle Columbia on Saturday contributed to a ripple in stock prices of defense companies yesterday, said Richard Whittington, defense analyst for American Technology Research Inc.
Shares of United Defense closed at $23.42 on the New York Stock Exchange, down 33 cents from $23.75 Friday.
"Investors are anxious about the defense industry, but United Defense won't be affected too much because it doesn't deal in the aerospace segment," Mr. Whittington said, rating the company a buy.
Mr. Whittington forecasts the company to increase earnings $1.90 per share, and boost revenue to $557.6 million in 2003, as President Bush proposes raising the defense budget 4.2 percent to $15.3 billion in his 2004 budget.
"United is in a prime position of increasing its business with the Navy, which has too few ships at sea as it is," Mr. Whittington said.
Craig Fraser, a fixed-income analyst with Fitch Inc., said he expected the company to play a key role in potential shipbuilding contracts, in addition to upgrading weapons systems and providing repair work on Navy destroyers.
"Part of the reason United bought U.S. Marine was to increase its business with the Navy, and the company had a decent amount previously," said Mr. Fraser, who tracks the company's credit level. "It's really augmented United's presence in Navy contracts."
The company also is joining with General Dynamics and Boeing to manufacture new armored combat vehicles, set to be available to the Army by 2008, Mr. Coffey said.
"It's an important program to the Army and we expect it to have a positive effect" in revenue growth, Mr. Coffey said.

Copyright © 2018 The Washington Times, LLC. Click here for reprint permission.

The Washington Times Comment Policy

The Washington Times welcomes your comments on Spot.im, our third-party provider. Please read our Comment Policy before commenting.


Click to Read More and View Comments

Click to Hide