Northrop Grumman weathers COVID-19 storm following Q1 results

Following today’s (Wednesday 29th April) release of Northrop Grumman’s results for Q1 2020, Madeline Wild, Associate Aerospace and Defense Analyst at GlobalData, a leading data and analytics company, offers her view:

“Northrop Grumman has shown a good level of resilience in the midst of the COVID-19 pandemic as sales increased across all four domains: aeronautics systems, defense systems, mission systems and space systems.

“The military orientated sales portfolio of Northrop has buffered the company against the effects of COVID-19 compared to more commercially led companies such as Boeing and Airbus. During the pandemic, Northrop has continued to push forward with product development, for instance testing for its OmegA rocket is on schedule despite the COVID-19 crisis. Subsequently, sales have grown for Northrop along lines of relatively secure investment. The US awarded Northrop a US$165m contract on 24 April for the production of Lot Nine Full-Rate Production (FRP) of the AGM-88E advanced anti-radiation guided missile (AARGM).

“Another test, the Integrated Air and Missile Battle Command System (IBCS), is due to take place later this month. In order to ensure this takes place, the US Army have been working with Northrop to implement mitigation strategies for any potential issues arising from the pandemic.

“However, not everything is positive. Operating income has decreased within Aeronautics and Defense Systems by 16% and 3%, respectively. These figures suggest that there has been some level of supply chain disruption due to COVID-19. Not only physical disruption due to reduced workforce, but also cost increases in the aeronautics confronted to the collapse of air travel and the struggle of commercial aviation. Northrop mentioned for instance EAC adjustments for Autonomous Systems that have lowered operating income figures. Nevertheless, if Northrop manages to support smaller companies within its supply chain and to maintain production schedule, the company should withstand the lasting effects of the pandemic.”

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