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Lockheed Martin reports lower profits and cash flow in Q2 2025

Lockheed Martin Reports Significant Decline in Q2 2025 Profits and Cash Flow
Lockheed Martin Corporation announced a substantial decrease in profits and cash flow for the second quarter of 2025, despite a modest rise in sales. The defense giant recorded sales of $18.2 billion, a slight increase from $18.1 billion in the same quarter last year. However, net earnings plummeted to $342 million, or $1.46 per share, compared to $1.6 billion, or $6.85 per share, in the second quarter of 2024, marking an approximate 80% decline in profitability.
Factors Contributing to Profit Decline
The sharp drop in profits was primarily driven by a $1.6 billion loss associated with ongoing difficulties in a classified aeronautics program. Additional pressures included the loss of the U.S. Air Force’s Next Generation Air Dominance (NGAD) sixth-generation fighter contract and the potential restructuring of two international helicopter programs within the Sikorsky division. The company also recorded $169 million in other charges during the quarter, which further weighed on its financial performance.
Cash flow from operations experienced a marked deterioration, falling to $201 million from $1.9 billion a year earlier. Free cash flow turned negative at $150 million, down from $1.5 billion in the same period last year. Lockheed Martin attributed this decline mainly to increased working capital requirements, including higher receivables and contract assets related to the F-35 program, elevated inventory levels at Sikorsky, and billing cycle effects on national security space program contracts.
Additional financial burdens included a $66 million write-off of fixed assets following the Air Force’s NGAD contract decision and $103 million in charges related to uncertain tax positions stemming from proposed IRS adjustments on manufacturing contract accounting methods.
Company Response and Market Reaction
In response to these challenges, Lockheed Martin has initiated measures aimed at addressing issues within its classified aeronautics program and the Sikorsky international helicopter programs. The disappointing quarterly results prompted a sharp market reaction, with the company’s shares falling more than 8% as investors expressed concern over the financial impact and the outlook for future performance.
While competitor responses remain uncertain, the defense industry may witness shifts in market dynamics as other firms react to Lockheed Martin’s setbacks and navigate their own strategic challenges and opportunities.

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