By Andrea Shalal
(Reuters) - U.S. weapons maker Raytheon Co N:RTN reported higher first-quarter profit on Thursday after a tax credit and favourable pension adjustments and forecast strong bookings and a slight gain in margins for the rest of the year.
Net income attributable to shareholders rose to $596 million, or $1.89 per share, from $488 million, or $1.49 a share, a year earlier. The company, which makes missiles and other military equipment, left its full-year forecast unchanged.
Excluding the tax credit and pension items, which were previously announced, earnings dropped to $1.43 per share from $1.56.
Raytheon Chief Financial Officer David Wajsgras said the company expected strong bookings and a slight gain in operating margins for the rest of this year after posting the highest quarterly earnings per share and cash flow in over a decade.
Cash flow reached $659 million in the first quarter, up from $422 million a year earlier.
Wajsgras told Reuters that the company's international demand remained strong, and that foreign orders would account for nearly 30 percent of revenues and nearly 40 percent of bookings in 2014.
Revenues fell 6.3 percent to $5.5 billion in the first quarter, a reflection of U.S. budget cuts, but Raytheon programs fared well in the 2015 U.S. budget proposal, Wajsgras said.
Sales and operating income were down at three of its four business divisions, but its intelligence, information and services unit showed a 1 percent increase in operating income despite a 5 percent drop in sales.
The company still expected revenue to reach $22.5 billion to $23 billion for the full year, with earnings of $6.74 to $6.89 per share, or $5.76 to $5.91, excluding special items.
Wajsgras said first-quarter bookings rose to $4.3 billion from $3.6 billion a year earlier due to a large missile defence order from Kuwait and a big cyber security order from an undisclosed country. Bookings were expected to top $7 billion in the second quarter, he said.
The company expected a slight improvement in operating margin over the course of the year, after the measure reached 14.3 percent in the first quarter, he said.
Raytheon reported an operating margin of 12.4 percent for the 2013 year, up 20 basis points from the previous year.
Rob Stallard, an analyst with RBC Capital Markets, said Raytheon's decision to leave its full-year outlook unchanged could disappoint investors.
To further lower costs, Raytheon plans to remove 10 percent of its global real estate square footage over the next three to four years, beginning with a reduction of about 2 percent in 2014, Wajsgras said. He said 3 percent had already been removed.
He said the company was also continuing to whittle down the number of suppliers to lower costs and improve quality.
(Reporting by Andrea Shalal; Editing by Lisa Von Ahn and Jeffrey Benkoe)