(Reuters) - Huntington Ingalls reported a better-than-expected quarterly earnings on Thursday, on the back of demand for aircraft carriers, amphibious assault ships and submarines amid high geopolitical tension.
WHY IT IS IMPORTANT
Demand for submarines and aircraft carriers is surging, fueled by China's expanding naval footprint and high global tensions, benefiting shipbuilding giants such as Huntington Ingalls.
CONTEXT
Huntington is the only major pure-play defense company that has outperformed S&P 500 index, helped by a well-supported navy shipbuilding budget, including inflation-related price increases.
GRAPHIC
BY THE NUMBERS
The largest U.S. military shipbuilding company's first-quarter revenue rose 4.9% from a year earlier to $2.81 billion, ahead of analysts' estimate of $2.79 billion.
Huntington reported quarterly diluted earnings of $3.87 per share, beating analysts' average estimate of $3.53, as per LSEG.
WHAT'S NEXT
The company reaffirmed its 2024 shipbuilding revenue target to be between $8.8 billion and $9.1 billion.
However, shipyard labor retention remains a stubborn problem. Shipbuilding is also under pressure due to program delays, most notably on General Dynamics and Huntington's Virginia Class submarine program which is being developed for the U.S. Navy.
These delays impact the timelines and budgets of future defense contracts for the company.
(Reporting by Pratyush Thakur in Bengaluru; Editing by Krishna Chandra Eluri)
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