Northrop Grumman realigning technology services business

By Marjorie Censer / January 26, 2017 at 2:02 PM

Northrop Grumman is continuing to realign its technology services business to better match the unit's capabilities with customer needs, the contractor's chief executive said Thursday.

Just over a year ago, Northrop consolidated its businesses from four to three segments: aerospace systems, mission systems and technology services.

Wes Bush said during a Thursday call with analysts that the technology services business has been moving away from lower-margin, undifferentiated work.

"The revenue has been declining . . . but it's been in a declining budgetary environment," he said during a call with analysts. "We see a continued decline in 2017 . . . but largely driven by the activities realigning the portfolio as well as the impact of the KC-10 revenues coming out."

L3 Technologies announced last year it was awarded the Air Force contract to provide contractor logistics support for the KC-10 aircraft. Prior to that, Northrop managed the effort.

Bush was hesitant to say that 2017 would represent a low for the unit, but said he expects a different path after that year.

"2017 would likely be where we'd see the impact of restructuring, and we ought to see a different trajectory as we move forward from there," he said.

Northrop Grumman on Thursday reported 2016 sales of $24.5 billion, up from $23.5 billion in 2015. The company's profit for the year reached $2.2 billion, up from just shy of $2 billion the prior year.

For the most recent quarter, Northrop's sales hit $6.4 billion, up about 12 percent from the same three-month period the prior year. Quarterly profit reached $525 million, up from $459 million a year earlier.