1:00PM New York - Lockheed Martin Corp. fourth quarter profit climbs 10%; company raises earnings forecasts.

Revenue Review

Lockheed Martin Corporation (LMT: chart), the world’s largest defence contractor, reported Thursday fourth quarter net sales remained flat at $10.8 billion, as sales from key Aeronautics division fell.

For the quarter, revenues at Aeronautics dropped 11%, as other segments gained. In the Electronic Systems unit revenue rose 3%, and were up 6% at IS & GS. For Space Systems net sales gained 7%.

In the full-year 2007, LMT said net sales climbed 6% to $41.9 billion compared with $39.6 billion reported in the year ago quarter.

Earnings Review

Lockheed Martin reported net earnings increase of 10% to $799 million from $729 million a year earlier.

Per share earnings rose 12.5% to $1.89 from $1.68 posted same period in 2006. The results beat expectations.

Analysts polled by Thomson Financial had estimated earnings of $1.69 per share on revenues of $10.73 billion.

For fiscal 2007, Lockheed Martin posted earnings of $3 billion or $7.10 per, up 20% from $2.5 billion or $5.80 per share in 2006.

During the fourth quarter, the company generated $420 million from operations compared to $333 million in the comparative period prior year. At full-year, the figure stood at $4.2 billion.

Lockheed paid cash dividends totaling $175 million in the fourth quarter and $615 million in the year.

Segment Analysis

Net sales for Aeronautics declined 11% to $3 billion in the quarter and rose 1% to $12.3 billion in the year. Operating profit was fractionally up 1% at $385 million.

Lockheed said quarterly sales declines in the segment were led by lower volume on F-16 and F-35 programmes in Combat Aircraft and C-130 programmes in Air Mobility. For the year, the sales increase was primarily due to higher volume in sustainment services activities in other aeronautics projects.

For the quarter, sales for Electronic Systems gained 3% to $2.87 billion and were up 6% in the year. Operating profit fell 1% to $360 million., dragged by lower volume and performance on certain international air defence programmes at M & FC and surface systems at MS2.

During the quarter, sales increases at Maritime Systems & Sensors (MS2) more than offset decreases at Missiles & Fire Control (M&FC) and Platform, Training & Energy (PT&E).

The growth at MS2 was primarily driven by increased volume in undersea and tactical systems activities. This growth partially was offset by declines in volume on certain tactical missile and air defense programs at M&FC and platform integration activities at PT&E.

Net sales for Information Systems &Global Services increased 6% to $2.83 billion in the three months to December while operating profit leapt 21% to $275 million.

At Space Systems, sales gained 7% to $2.12 billion and was up 4% in the year at $8.2 billion, led by higher revenues from the Strategic & Defensive Missile Systems and Space Transportation. Divisional operating profit rose 26% to $236 million.