The leaders of both General Dynamics and Northrop Grumman said today they are seeing some employees fail to show up for work, but said they expect absentee rates to soon improve.
In a call with analysts today, Phebe Novakovic, the chief executive of General Dynamics, said the company has “experienced some deterioration in efficiency driven by absenteeism at a couple of our facilities.”
She noted General Dynamics is “incurring rather significant cost to sanitize the work environment in our facilities and to provide additional” personal protective equipment. GD is also seeing “definite weaknesses” in the supply chain, particularly in the suppliers of its Gulfstream business.
However, Novakovic said the company’s defense business is performing well and that General Dynamics expects the Pentagon’s accelerated progress payments to “prove to be very helpful.”
She said the company expects “absenteeism to decline as we see the rates of infection slow.”
General Dynamics today reported that sales during its most recent quarter totaled $8.7 billion, down almost 6% from the same three-month period a year earlier. The contractor’s quarterly profit reached $706 million, down 5% from the prior year.
Northrop Grumman said today it is anticipating some coronavirus effects in its aeronautics business. Dave Keffer, Northrop’s chief financial officer, told analysts the company has seen in the unit “risks in our supply chain and changes in employee attendance and productivity in certain areas.”
“We expect that the supply chain and employee attendance impacts of COVID-19 that we began to see toward the end of March will be significant enough to impact our financial performance in certain production areas, particularly in [the second quarter],” Keffer said.
Kathy Warden, Northrop’s CEO, told analysts the company is seeing some positive signs, however.
“We are starting to see absenteeism reduce and more people coming to work in the production facilities,” she said. “We are seeing small businesses that had to pause operations for a short period of time resuming their operations. And so, I would say that the trajectory is positive, but we still have uncertainty ahead.”
Warden said Northrop is advancing $30 million of payments per week to critical small and mid-size suppliers and expects these advances to total more than $200 million. The company is also sending increased Pentagon progress payments to suppliers, she said.
Northrop today reported sales in its most recent quarter totaled $2.8 billion, up 1% from the same three-month period a year earlier. The company’s quarterly profit hit $868 million, also up 1% from the prior year.