Lockheed Martin Q2 profit plunges 80% on $1.6 billion hit from secret project

The substantial financial hit was attributed to challenges with a secretive Aeronautics program and ongoing issues with overseas helicopter contracts under its Sikorsky unit

Lockheed Martin reported an approximately 80% drop in its second-quarter profit on Tuesday, following a $1.6 billion pretax charge primarily tied to a classified project within its Aeronautics division. The announcement triggered an over 8% decline in the defence giant's share price.

The company also lowered its full-year 2025 operating profit forecast by $1.5 billion, or 18%, now projecting $6.65 billion. This updated guidance, which marks a downgrade from its April estimate, does not account for any potential impacts from international tariffs—an issue that has affected other defence firms with global clients.

However, Lockheed's tariff exposure is considered minimal due to its primarily domestic supply chain and workforce, noted Brian Mulberry, portfolio manager at Zacks Investment Management.

The substantial financial hit was attributed to challenges with a secretive Aeronautics program and ongoing issues with overseas helicopter contracts under its Sikorsky unit.

Defence companies are increasingly struggling with cost escalations, as inflation and supply chain constraints inflate the expenses of long-term contracts that were negotiated years in advance.

Earlier in July, the Pentagon confirmed that Lockheed had completed the delivery of 72 fighter jets that had been in storage.

Lockheed's net earnings for the quarter fell to $342 million, or $1.46 per share, down from $1.64 billion, or $6.85 per share, in the same period last year. However, when excluding the impact of the charges, the company reported an adjusted earnings figure of $7.29 per share—surpassing analysts’ average forecast of $6.44, according to LSEG data.

Despite the earnings beat, Lockheed's revenue for the quarter came in at $18.16 billion, falling short of Wall Street’s projected $18.57 billion.

Talking about the Q2 numbers, Lockheed Martin CEO Jim Taiclet, “Over the course of the past few months, Lockheed Martin systems and platforms once again proved highly effective in combat operations and in deterring further aggression. Our F-35s, F-22s, PAC-3, THAAD, Aegis and many others, crewed by the soldiers, airmen, sailors, marines and guardians of the U.S. and its Allies, and supported by our own dedicated teammates, performed extremely well in the most crucial and challenging situations.”

(With Reuters inputs)