(Reuters) – The largest U.S. military shipbuilder Huntington Ingalls on Thursday cut its 2024 shipbuilding revenue due to uncertainty in navy agreements, supply chain issues and labor shortages, sending its shares down roughly 7% premarket.
The company forecasts shipbuilding revenue, which is the focus of two of its three divisions, will likely be near the lower end of its previously projected range of $8.8 billion to $9.1 billion.
Huntington had expected to reach an agreement with the U.S. Navy for Virginia-class Block V and Block VI and Columbia-class submarines in the second half of 2024.
However, CEO Chris Kastner cited “some uncertainty emerged about the timing of that agreement”, prompting the company to update its profitability and cash flow assumptions.
Despite the rising demand for submarines and aircraft carriers, fueled by China’s expanding naval footprint and high global tensions, Huntington Ingalls has not been able to capitalize on it due to persistent problems in retaining shipyard labor.
For the third quarter, Huntington’s per-share profit was $2.56, down from $3.70, a year ago. Revenue also declined 2.4% to $2.7 billion.
(Reporting by Pratyush Thakur in Bengaluru; Editing by Vijay Kishore)