(Reuters) - Tomahawk missile maker Raytheon Co (N:RTN) on Thursday lowered its forecast for annual cash flow due to a $1.25 billion pension contribution in the current quarter.
The Waltham, Massachusetts-based company expects 2018 operating cash flow from continuing operations of between $2.6 billion and $3 billion, down from an earlier expectation of $3.6 billion to $4 billion.
Besides the contribution, Raytheon will take a non-cash pension settlement charge of $288 million in the third quarter of 2018, resulting in earnings per share reduction of 79 cents.
Still, the maker of Paveway laser-guided bombs and SM-3 anti-ballistic missiles slightly raised its yearly earnings forecast thanks to a lower tax rate, derived from pension contribution benefits.
Raytheon expects 2018 earnings from continuing operations of between $9.77 and $9.97 per share, up from a previously expected range of $9.70 to $9.90 per share. The company said its 2018 effective tax rate will be about 10.5 percent, down from the prior 18 percent.
Raytheon expects annual sales of between $26.7 billion and $27.2 billion, the company said, some $200 million higher than its prior forecast.
Its revenue rose 5.5 percent to $6.63 billion in the second quarter ended July 1, driven by higher sales in its missile systems business, its biggest.
The results comes as Raytheon, like other U.S. defense contractors Lockheed Martin (N:LMT) and Boeing Co (N:BA), benefits from stronger global demand for weapons, fighter jets and tanks. Raytheon is also expected to gain from higher U.S. defense spending under the Donald Trump administration.
The company's income from continuing operations attributable to common stockholders rose to $799 million or $2.78 per share in the second quarter, from $553 million or $1.89 per share a year earlier, helped chiefly by lower taxes.
Bookings, a measure of firm orders won by Raytheon, rose 33 percent to about $8.69 billion.