BIW owner reports earnings increase

COLLEGE PARK, Md. – Defense contractor General Dynamics reported slightly higher fourth-quarter earnings Wednesday, as a charge from the planned sale of a coal mining unit dampened higher revenue in the company’s core military hardware and other businesses.

General Dynamics, which makes the Abrams tank and has shipbuilding and private jet divisions, said net income rose to $408 million, or $1 per share, versus $406 million, or $1 per share, a year earlier.

In Maine, the company owns Bath Iron Works shipbuilder and a General Dynamics Armament and Technical Products plant in Saco.

Earnings from continuing operations, which excludes the effect of the planned coal mining sale, rose 16 percent to $463 million, or $1.13 per share. That was a penny a share short of the average analyst estimate of $1.14 per share, according to a Thomson Financial poll. The analysts’ estimates typically exclude one-time items.

The Falls Church, Va.-based company did not specify how much the coal operation affected earnings, but it booked $55 million in quarterly charges from discontinued operations on its balance sheet. General Dynamics owns three coal mines in Illinois.

Sales rose 13 percent to $6.51 billion from $5.76 billion last year, but fell short of Street estimates for $6.63 billion.

“General Dynamics generated solid returns in the fourth quarter of 2006, capping another very strong year,” company CEO Nicholas Chabraja said.

For the year, net income rose 26 percent to $1.86 billion, or $4.56 per share, from $1.46 billion, or $3.61 a share, a year ago. Revenue rose 15 percent to $24.1 billion from $20.98 billion a year ago.

The company’s information systems and technology division saw revenue grow to $2.5 billion in the fourth quarter, up 20 percent from $2 billion in the fourth quarter of 2005. The combat systems division, which makes tanks, armored personnel carriers and other equipment primarily for the U.S. Army, posted a 12 percent increase to $1.8 billion.

General Dynamics’ marine systems unit posted the smallest revenue increase, 3 percent, to $1.2 billion. The company’s Electric Boat unit said in December that it plans to shed 1,000 workers, or about 10 percent of its work force, by the end of the year due to a decline in work. Based in Connecticut, Electric Boat makes military submarines.

Wall Street is generally bullish on defense contractors, expecting that President Bush’s forthcoming 2008 budget and a supplemental defense spending bill will include large amounts for defense procurement. General Dynamics is expected to be one of the biggest benefactors as the Army seeks to replace worn out equipment used in Iraq.

Shares of General Dynamics fell $1.04, or 1.29 percent, to close at $79.85 on the New York Stock Exchange.