Aerospace and defense firm Raytheon Technologies Corp lowered its full-year revenue forecast on Tuesday, blaming the loss of sales to Russia due to Western sanctions imposed over the war in Ukraine.
Shares in the U.S. company fell 1.7% in pre-market trading to $98.00.
As a large number of U.S. companies have severed ties with Russia following Moscow’s invasion of Ukraine and the introduction of Western sanctions, the aviation industry is among the sectors severely impacted.
Raytheon’s Chief Financial Officer Neil Mitchill told Reuters that lowering the 2022 revenue guidance by $750 million “was strictly related to direct and indirect sales that are no longer allowed because of the global sanctions imposed on Russia.”
Raytheon expects full-year revenue to be between $67.75 billion and $68.75 billion, lower than its previous forecast of $68.5 billion to $69.5 billion.
About three quarters of that lost $750 million revenue was direct sales of commercial equipment to Russia, Mitchill said, and the remainder was engine parts that would have been sold principally by Pratt & Whitney Canada.
Chief Executive Greg Hayes told analysts on a post earnings conference call that Raytheon had sold its share of a Russia-based heat exchanger joint venture for Boeing Co and Embraer SA as Russia’s invasion of Ukraine unfolded.
However, the company said revenue rose 3% to $15.72 billion in the quarter, driven by a recovery in air travel demand, which boosted sales of its aerospace products and services.
Raytheon posted a net income of $1.08 billion, or 72 cents per share, in the quarter ended March 31, compared with $753 million, or 50 cents per share, last year.
Commercial aerospace sales rose on a rebound in demand after being depressed during a period of slower commercial air travel during the pandemic.
Compared to the same quarter a year ago, Collins Aerospace which makes jet parts saw sales rise 10%, and Pratt & Whitney which makes jet engines saw sales jump 12% despite slower military engine sales.
Sales at Raytheon’s defense-related businesses, Missiles & Defense, dropped 7% compared to the same quarter a year ago, and Raytheon Intelligence & Space saw sales fall 5% after the Global Training and Services business was sold to Vertex Aerospace.
Hayes said the company would not see a financial benefit from Ukraine-linked weapons orders in 2022. For example, Stinger and Javelin missile production would could ramp up in 2022, but larger replenishments would be in 2023 or 2024, he said.
Raytheon’s adjusted earnings per share in the quarter were $1.15, versus Wall Street analysts’ $1.02 forecast, according to Refinitiv data. Revenue was $15.72 billion with analysts forecasting $15.8 billion according to Refinitiv data.
(This story corrects “with” to “for” in 7th paragraph to clarify Raytheon had Embraer and Boeing as customers not JV partners)
(Reporting by Nilanjana Basu in Bengaluru; Editing by Amy Caren Daniel, Chizu Nomiyama and Susan Fenton)