Aerospace and defense giant Raytheon Technologies Corp. cut its 2022 sales forecast and warned of potential supplier constraints as it ends commercial ties with Russian customers and a titanium supplier.
“We’re done in Russia. Full stop,” Raytheon’s Chief Executive Officer Greg Hayes said of the aerospace and defense conglomerate’s dealings with Russia in the wake of the nation’s invasion of Ukraine and sanctions imposed by the U.S., Canada and European Union. “We aren’t going back.”
Revenue this year will be $67.75 billion to $68.75 billion, down $750 million from the prior range, the company said Tuesday in a statement. Analysts had expected $69.1 billion, according to the average of estimates compiled by Bloomberg. Raytheon reaffirmed its profit and cash-flow forecasts.
The revised outlook highlights the impact of the commercial aerospace industry’s broad withdrawal from Russia. Raytheon halted Russia sales and support services at its Pratt & Whitney jet engine unit and Collins Aerospace aircraft components business in early March.
The company is also searching for new sources of titanium sponge, castings and forgings after ending a long-time relationship with a Russian supplier, Hayes said. While Raytheon has sufficient stocks to continue production for now, deliveries out of its Pratt Canada division could be crimped starting late this year, he told analysts during an earnings conference call Tuesday.
Raytheon expects its sales to benefit over the longer term as airline travel rebounds and defense budgets rise in the U.S. and western Europe in response to heightened geopolitical tensions. But the company won’t have a good handle on how the arms sales will bolster its bottom line for another year or two, Hayes said.
For example, replacing the Stinger missiles diverted to Ukraine won’t be a matter of simply ratcheting up production. That’s because Raytheon has a “very limited stock” of material on hand and some components are no longer commercially available. The company is talking through the supplier constraints with the Pentagon, which hasn’t purchased the missiles in 18 years, Hayes said.
Raytheon’s shares were little changed at $99.35 at 9:51 a.m. in New York. The stock gained 16% this year through Monday’s close, easily outpacing the 9.9% decline in the S&P 500.