A view of Newport News Shipbuilding. (Matt Hildreth, Daily Press/TNS)
(Tribune News Service) — A slower pace of work on aircraft carriers and decline in submarine maintenance services drove a slight decline in Newport News Shipbuilding’s financial results for the first three months of the year.
But last year’s move by its parent company, Huntington Ingalls Industries, to expand engineering and information technology services with the acquisition of Alion Science and Technology boosted HII’s revenue by 13.1% from last year’s level to $2.58 billion.
“Risk retirement” payments from the Navy, meant to compensate the yard for unexpected difficulties on Virginia class submarines, were below last year’s level, which trimmed operating profits for both the yard and its parent.
Nevertheless, “results ... were slightly ahead of our initial expectations as we continue to navigate through a challenging operational environment,” said Chris Kastner, HII’s president and chief executive officer.
At Newport News Shipbuilding, first quarter revenue slipped 1.2% to $1.39 billion because of a lower volume of work on the refueling and complex overhaul of USS George Washington, construction of the carrier John F. Kennedy and maintenance on USS Gerald R. Ford.
Increased work on the overhaul of USS John C. Stennis and a stepped-up pace on Columbia class submarines and Block V Virginia class submarines wasn’t enough to offset this.
A decline in the work for the yard’s maintenance of submarines also depressed revenue.
The declines in risk retirement payments for Virginia class submarines caused a 12.9% drop in the yard’s operating income to $81 million.
HII’s operating income declined 6.1% to $138 million, as revenue increased 13.1% to $2.58 billion. Per share earnings declined to $3.50 from $3.68.
New contract awards for HII’s two shipyards and its Mission Technologies division in the first quarter totaled about $2 billion, bringing total backlog of work to approximately $47.9 billion as of March 31.
During the quarter, the yard delivered Virginia-class submarine Montana and completed maintenance and modernization work on the submarine USS Helena as well as USS Gerald R. Ford. The overhaul of USS George Washington is about 95% complete, while overhaul of USS John C. Stennis is about 25% complete. The yard also reached a 5-year labor agreement with United Steelworkers Local 8888.
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