Last week global defence contractor, Lockheed Martin, released its full year results to end December 2012. They showed an increase in net sales of 2% to $47.2b. Lockheed Martin’s new Chief Executive (in post since end of last year), Marillyn Hewson, referred to a record performance and backlog.
However, the company continues to face the uncertainty of sequestration (US legal procedure in which automatic spending cuts are triggered) at a time when the Information Systems and Global Services (IS&GS) business is already suffering as a result of ongoing cuts to US federal IT budgets. IS&GS is Lockheed Martin's IT business and represents about 18% of total revenues. During 2012, IS&GS net sales decreased by 6% to $8,846m; take out sales attributable to the acquisition of QTC ($140m) and the organic decline was 7%. The decrease was attributed to lower net sales from various programs during 2011 – mainly US projects but also including the UK Census. The business is projecting that IS&GS net sales will fall by a similar percentage (4-7%) in FY13.
We estimate that Lockheed Martin IS&GS' UK SITS revenues were approximately £345m in FY11. But this included c£100m from the UK Census Programme so, as a result, headline revenues likely fell in FY12. However, we suspect there is more going on under the covers and will be interested to learn more about the 2012 performance of the UK business when we next talk to management.
Lockheed has long had an ambition to build a further footprint in UK IT & services, building on its role as the US Federal Government’s leading IT services provider. We know that it is building its future pipeline around systems engineering and systems integration opportunities in both defence and broader civil government, and at the Farnborough Air Show last year showcased its capabilities in Big Data, Cyber Security, Cloud Computing and Data Analytics. We hope to see it work increasingly closely with other parts of the Lockheed Martin organisation to allow it to differentiate from its competitors. Subscribers to TechMarketView’s PublicSectorViews service will be able to read a full review of Lockheed Martin’s UK SITS business in our forthcoming UK public sector SITS supplier landscape report due to be published this week (for more information please contact Deb Seth).