U.S. aerospace manufacturer Raytheon Technologies Corp forecast weak demand from airlines as the COVID-19 pandemic hobbles the air travel industry but said cost cuts helped it report a better-than-expected quarterly profit.
Shares fell more than 4% in trading on Tuesday.
The health crisis has dealt a heavy blow to the U.S. aerospace sector, already grappling with lower sales from the grounding of Boeing Co’s top-selling 737 MAX planes, forcing several companies to book billions more in losses as air travel came to a near halt.
However, Raytheon reaffirmed its projection for a positive cash flow of about $2 billion for the full year, thanks to its defense unit that contributes to more than half of the company’s overall sales.
While the commercial aerospace market continues to drag, the company said it remains confident to grow its defense unit, regardless of who wins in the U.S. presidential election on Nov. 3.
“The current administration and even at the end of the Obama administration, we have seen that strong bipartisan support with the way defense spending has grown,” Chief Financial Officer Toby O’Brien told Reuters.
“If there are budget pressures that the Department of Defense faces, whether it be two or three years down the road, we feel we are going to get our fair share, if not more.”
Raytheon said it achieved $700 million of cost reduction and $1.9 billion of cash conservation in the third quarter ended Sept. 30.
The company, which had about 195,000 employees when it merged with United Technologies in April, has laid off nearly 20,000 full-time and contract employees in its commercial aerospace business, which makes aircraft engines and spare parts.
Excluding items, Raytheon earned 58 cents per share in the quarter, above the Wall Street’s average expectation of 50 cents per share, according to IBES estimates from Refinitiv.
Revenue rose about 30% to $14.75 billion.
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