Defense Company Northrop Grumman Aims To Expand Production Capacity In Poland: Report

Northrop Grumman Corp NOC is reportedly exploring the production of 120-millimeter tank ammunition in Poland to boost defense production capacity.

Kathy J. Warden, Northrop Grumman CEO, told Reuters, while talks were advanced the company still needed to "find the right industrial partners and the right contract structures. But all of that work is underway."

Northrop is focusing on expanding its European business in Poland and other nations with similar product lines amid countries geographically close to Russia exploring deals to build U.S. weapons in Europe. 

Mesko, which belongs to the state-owned PGZ armaments group, is in the final stages of negotiating the deal, as per the report.

Mesko's deputy chief executive Przemyslaw Kowalczuk expects the comprehensive offset agreement, which falls under Poland's purchase of Abrams tanks and includes production of 30 mm and 40 mm rounds for Bushmaster guns, to be penned in late December or early January.

Notably, the offset agreements are meant to compensate the country buying arms abroad through mandatory cooperation between the supplier and domestic companies.

In October, NOC reported Q3 FY23 sales growth of 9% year-over-year to $9.78 billion, beating the consensus of $9.58 billion, and EPS was $6.18, up from $5.89 in Q3 FY22.

For the quarter, net awards totaled $15 billion, and backlog totaled $83.9 billion.

Price Action: NOC shares closed lower by 0.24% at $463.88 on Thursday.