General Dynamics has seen 'most painful' impact of COVID-19 in European IT program

July 29, 2020

By Marjorie Censer

General Dynamics reported a $40 million charge in a program at its information technology business in its most recent quarter because the company is unable to get its employees to the European worksite, according to its chief executive.

In a call with analysts this morning, Phebe Novakovic said the ongoing pandemic has had the "most significant impact" at General Dynamics Information Technology.

She pointed to a particular pain point in the legacy CSRA contract in Europe.

"We can't get our people from here to there to do the work," she said. "This is the most painful programmatic impact of COVID-19 we have experienced."

"This impacted revenue and earnings and will continue to do so," Novakovic added. "Some of IT services' highest-margin programs have come to a hard stop because of COVID-19."

She said General Dynamics has seen 515 cases of coronavirus to date in its workforce of about 104,000.

"We continue to incur significant COVID-related direct costs," Novakovic told analysts.

Meanwhile, General Dynamics today said sales during its most recent quarter totaled $9.3 billion, down 3% from the same three-month period a year earlier.

The contractor recorded quarterly profit of $625 million, down close to 23% from the prior year.