03 Nov 2023 -

General Dynamics: Fragile new reality of supply chains

According to Washington Technology, General Dynamics’ (GD) IT hardware and product unit has accepted the ‘new reality’ of supply chains, admitting they remain fragile. Like all companies, DG has faced significant disruptions due to global supply chain challenges, particularly concerning electronic components. These challenges took centre stage in GD’s third-quarter earnings call, providing analysts an opportunity to understand the company’s current stance and its strategies to mitigate these issues.

Jason Aiken, GD’s Chief Financial Officer and head of the Technologies segment, praised the Mission Systems hardware team’s efforts in navigating through the challenges.

Aiken openly acknowledged the fragility of the supply chain, stating, “The supply chain, to be completely candid with you, remains, and I think we expect to remain, what I call fragile.” He doesn’t foresee a return to the pre-pandemic state in the immediate future. However, there’s a silver lining: Mission Systems has assimilated this “new normal” into their planning, making their future in the electronics supply realm appear more stable and predictable.

Highlighting the journey, Aiken revealed that the previous year’s latter half experienced significant supply chain holdups for Mission Systems, particularly in the third quarter, which extended into the fourth. This is crucial since a considerable portion of the unit’s revenue stems from product deliveries. Yet, Aiken remains hopeful about achieving a “more regular order and a more regular drumbeat” by this year’s end.

In terms of figures, the Technologies segment posted a 7.9% year-on-year increase with a third-quarter revenue of $3.3 billion. Their operating earnings grew by 10.5%, reaching $315 million. GD projects full-year Technologies sales to be around $12.7 billion. It’s worth noting that Mission Systems and the IT services division are the two core units of GD’s Technologies segment.

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