Hewson said she hoped the U.S. Senate would approve the agreement,
which was passed by the House of Representatives last week, and was
optimistic that further cuts required under sequestration could be
eliminated as the U.S. economy improved.
"We had factored sequestration in, so now that we have more input
... assuming that the budget gets approved, we'll have an
opportunity to revisit what our outlook is," said Hewson, who will
also assume the job of chairman of the company's board on January 1,
a year after she became CEO.
Lockheed, the Pentagon's No. 1 supplier, has said that the budget
cuts will knock about $400 million to $450 million from full-year
revenues in 2013, and is currently forecasting a further slight
decline in sales in 2014. Hewson said any revision in the company's
guidance would come during the company's next earnings call in
The Senate this week is expected to approve the budget deal that
passed the House 332-94 on Thursday. The measure would roughly halve
$52 billion in automatic spending cuts facing the Pentagon in fiscal
2014, while providing additional relief from mandatory reductions in
projected spending in 2015.
"I'm very encouraged by the budget deal," said Hewson. "It gives a
lot more stability to us as an industry. It's certainly not
everything that everybody wanted, but a very important compromise
that moved things forward."
Lockheed, which builds everything from fighter jets to satellites
and coastal warships, is aggressively pursuing sales in other
countries and adjacent markets to offset the drop in U.S. military
spending after a decade of sharp growth.
Hewson said Lockheed expected international sales to grow to 20
percent or more of total revenues over the next few years from
around 17 percent now. She said international sales would grow in
absolute terms from $8 billion in 2012, not just as a percentage of
Hewson, who ranked No. 4 in Fortune magazine's list of the most
powerful women in U.S. business for 2013, will succeed Robert
Stevens as chairman. Stevens will retire from Lockheed in early
2014, the company said.
Hewson moved into the top job at Lockheed after Christopher Kubasik
was fired when he admitted to an improper relationship with a
Lockheed and other arms makers have been warning about the
devastating impact of the across-the-board cuts, known as
sequestration, since passage of the Budget Control Act in 2011.
But the company's stock is trading near a record high of $144.43 hit
in late November, and earnings are up, compared to year-earlier
levels. Lockheed shares closed $1.02 or 0.7 percent higher at
$140.05 on Monday.
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Hewson said the company's strong performance in 2013 was due to
concerted efforts to reduce production and overhead costs by
consolidating facilities and laying off workers.
"I don't believe we've been crying wolf," Hewson asked, when asked
about the defense industry's better-than-expected performance this
year. She said she remained convinced that the industry's long and
vocal concerns had led to some positive policy changes on
implementation of the cuts.
"By raising the awareness we got some policy decisions made. We got
some feedback on how it would happen," she said. "I think that we as
an industry have been appropriate in raising the flag about it, and
having our voice on Capitol Hill about why it is poor public
Hewson said the Pentagon had also been able to shift unused funds to
minimize the impact on programs like the $392 billion F-35 fighter,
the costliest U.S. arms project. The F-35 accounts for 15 percent of
Lockheed's annual sales and is set to grow in coming years as U.S.
and foreign sales increase.
She said the budget deal was well timed since sequestration budget
cuts had been poised to hit the Pentagon and the defense industry
much harder in 2014.
Lockheed was well-placed to benefit from rising international demand
for its fighter jets, C-130 cargo planes, satellite technology and
air and missile defense systems, Hewson said. She said the company
was also looking to expand in adjacent markets such as energy and
Hewson said Lockheed, the No. 1 provider of information technology
to the U.S. government for the past 19 years, said she saw growing
demand for cybersecurity services in the United States and overseas,
despite the National Security Agency spying scandal.
She said the company would continue to evaluate possible
acquisitions to round out its businesses in certain areas, or gain
access to new customers and new markets.
(Reporting by Andrea Shalal-Esa; editing
by Tim Dobbyn and Bob Burgdorfer)
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