Submarine builder Electric Boat's parent company reported Wednesday an 8.5 percent profit increase over last year ago in the third quarter.
The defense giant General Dynamics, based in Falls Church, Va., said in its latest earnings report that revenues declined but operational cost-cutting more than made up the difference in the period that included July, August and September. The company's profits for the quarter were $651 million.
GD reported earnings per share of $1.84 in the quarter, easily beating analysts' projections by 16 cents a share.
"This quarter was better than anticipated," Phebe N. Novakovic, GD's chairman and chief executive officer, said in a conference call. "We had a great quarter."
The third quarter's better-than-expected profits led GD to raise its expectations for 2013. Estimated earnings per share that previously were projected at $6.86 to $6.95 for the year were raised to $6.90 to $7 in the latest report.
Despite the report, GD's share price fell more than 2 percent on the day to $86.22.
Investors focused Wednesday on problems within GD, including an overall revenue decrease of 1.7 percent. The company's key combat systems division was hardest hit, as sales fell 30 percent from a year ago.
The marine systems division, of which EB is a part, saw only a 1.6 percent increase in revenues, while operating profits declined 8.6 percent.
GD said lagging revenue was related to lower government spending on defense systems. But the company's Gulfstream division, which markets jet airplanes, helped offset these losses with a 17 percent boost in quarterly sales over the same period last year.
Still, Novakovic said GD is being cautious with its cash position, expecially considering the brinksmanship that played out in Washington over the past few weeks.
"The government took the nation to the edge on the debt ceiling extension," Novakovic said. "We were forced to gaze into the abyss.... That was sobering."
She added that the political machinations of October could well be repeated in January when another debt-ceiling deadline looms.
"It's entirely possible that we find ourselves in an extended period of time trapped in Dante's first circle of hell," she said.