Slow government spending drives $2.1B quarterly loss at General Dynamics
Government contractor General Dynamics Corp. recorded a $2.1 billion loss for the fourth quarter of 2012, citing slower defense spending and shrinking government contracting budgets, according to a company release on Wednesday.
The firm’s losses stemmed largely from its Information Systems and Technology group, which had a $2 billion goodwill impairment resulting from an anticipated reduction in future government spending and decreased demand. About $867 million in other charges at the technology division and the company’s aerospace group also contributed.
General Dynamics Chairwoman and CEO Phebe Novakovic said that the results reflected “the fact that some of [the company’s] markets are contracting” and acknowledged that the firm had to do more to improve performance.
On Jan. 14, the company said that 139 workers at a Stryker production facility in Alabama were being laid off because of tightening defense budgets.
Though General Dynamics did not specifically mention possible across-the-board cuts from sequestration, other competitors including Lockheed Martin Corp. and Raytheon Co. said that they were not factoring it in their 2013 forecasts. Boeing announced job cuts on Jan. 10, saying that the “diminished demand” from reduced government and defense spending was a major factor in the decision.