DN - Defence Notes

Raytheon Missile sales go from strength to strength

27th October 2017 - 03:10 GMT | by Alice Budge in London

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Raytheon enters the final quarter of the year in a strong financial position supported by continued international and domestic demand across its missile portfolio.

For its third quarter earnings, the company reported net sales growth of 10% for its missile systems segment compared with Q3 2016, driven primarily by guided munition programmes including Paveway and Excalibur.

The most notable booking in the quarter was for the development of the Redesigned Kill Vehicle (RKV), a contract worth $492 million.

Speaking on the results, Thomas Kennedy, CEO of Raytheon, said the missile segment is on track to 'dominate 2018 growth'.

‘We are seeing, especially relative to Eastern Europe, significant concerns relative to their sovereignty and the security of their citizens. A large portion of their needs is in the integrated air and missile defence area,’ he said.

Poland and Romania were highlighted as two of the largest countries that are currently working through the FMS process to procure the Patriot system.

Buyers of such systems are increasingly looking for faster contracting processes and rapid delivery. 

‘They’re putting pressure on us to deliver as fast as we can possibly deliver,’ Kennedy explained.

‘The threat’s also increasing, which is driving the demand signal even higher… so, the question is not about buying, the question that we get is how fast you can deliver… so we are really working in our factory to accelerate delivery of the systems.’

Demand is also expected to remain strong in the Middle East, with Raytheon estimating it will receive between $3 billion and $4 billion from the recent sale of the THAAD system, which relies on the company’s long-range TPY-2 radar, to Saudi Arabia.

Meanwhile in Asia-Pacific Kennedy drew on the recent re-election of Shinzo Abe as a signal that the country is likely to begin modifying its constitution to allow for a more active defence force, offering a range of opportunities for Raytheon going forward. 

'Japan has indicated it is pursuing missile defence solutions to protect its homeland, creating opportunities for us with our [Air and Missile Defence Radar], SM-3 Block IIA missiles and SM-6 missiles,' he said, adding that other Asia Pacific countries have expressed interest in Raytheon missile solutions. 

With these areas of demand identified, Anthony O’Brien, vice president and CFO at Raytheon, made it clear that sales within the missile systems divisions are expected to be strong throughout the next quarter and into 2018.

‘We are well positioned across the entire missiles portfolio with the strong backlog,’ he said.

'We expect to see that additional sales volume really coming from the start-up of some recent awards as well as some Q4 awards… the growth next year is a little bit more weighted towards missiles.’ 

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