The pandemic has crippled many companies' ability to send and receive the parts and supplies they need to produce a wide range of products, creating shortages, reducing inventories and hammering profits.
Lockheed's chief financial officer said the problem worsened for them over the last two months, as the maker of the F-35 fighter jet lowered its 2021 revenue expectations by 2.5% to $67 billion and said next year's revenue could fall to $66 billion.
Lockheed's poor outlook, just 66 days from year-end, came after it reassessed its five-year business plan "given recent external and programmatic events," Chief Executive Jim Taiclet said in the earnings report that dashed hopes the United States' largest arms maker could muscle its way through the pandemic.
Shares of defense stocks fell after the report, with the Dow Jones U.S. Defense index down nearly 6% at midday.
The defense company's CFO said on a call with analysts that its suppliers "are still dealing with the financial stress caused by the global pandemic."
A company executive noted suppliers that serve the commercial market as well as the defense market were struggling the most. The combination of fixed costs and falling revenue - the aviation industry in particular has struggled during COVID-19 with the huge drop in travel - hurt the suppliers that serve both markets.
On the call with analysts, Taiclet said the company's sales would go up again in 2023 and increase steadily through 2026.
He also said Lockheed now sees its planned purchase of rocket maker Aerojet Rocketdyne Holdings Inc (AJRD.N) closing in the first quarter of 2022, a bit later than previously expected.
Support for the defense industry could be on the way as congressional committees are set to start their conference on the Biden administration's 2022 defense policy bill that outlines increased spending.
Lockheed raised its earnings-per-share guidance for 2021 to $22.45, more than analyst estimates of $22.19, as operating profits rose 6.6% versus the same period last year.
The third quarter which ended on Sept. 26 showed sales at Lockheed's largest unit, aeronautics - which makes the F-35 fighter jet - down 2% from a year earlier, when the pandemic locked down many parts of the defense industry's supply chain.
Through Sept. 26, the unit made 90 F-35 deliveries, with 36 occurring in the third quarter. Lockheed aims to deliver 133 to 139 of the stealthy jets this year.In 2022, Lockheed plans to deliver 151 to 153 of the fighter aircraft. read more
Lockheed's third-quarter revenue was $16 billion, 6.6% below analyst revenue estimate of $17.1 billion, Refinitiv data showed.