Shawshank,VA 4/25/12 (StreetBeat) -- Defense contractor General Dynamics (NYSE: GD) said Wednesday its first-quarter net income fell 9 percent, below analysts' expectations. Earnings were hurt by cuts in government contracts and an accounting charge in its European combat systems operations.General Dynamics, which makes jets, tanks and other military vehicles, said its aerospace revenue was strong — up 20 percent during the quarter on demand for its Gulfstream jets. Other divisions were hit by a slowdown in U.S. defense spending.
Under a budget agreement that President Barack Obama and congressional Republicans reached last August, defense spending will be cut by $487 billion over the next decade.
"We are continuing to see slower-than-anticipated award activity," said CEO Jay L. Johnson, referring to government contracts.
Net income fell to $564 million, or $1.58 per share from $618 million, or $1.66 per share last year. Revenue fell 3 percent to $7.58 billion, from $7.8 billion.
Analysts polled by FactSet expected net income of $1.69 per share on revenue of $7.91 billion.
The Falls Church, Va.-based company said a $67 million accounting adjustment in its European operations reduced earnings by 13 cents per share.
General Dynamics expects net income of $7.10 to $7.20 per share in 2012. Analysts forecast $7.32 per share.
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