Lockheed Martin Corp , the top defense contractor, reported a lower first-quarter profit on Tuesday as higher pension costs offset rising sales.

But results were better than expected, aided by a lower share count, and Lockheed raised its full-year forecast, citing effects of share repurchases.

The company said second-quarter revenue growth would likely lag that of the first quarter, and its shares pared some of their earlier gains to close up 0.4 percent.

We're probably going to see a lower second quarter than a lot of people are expecting and then probably more rapid growth in the second half of the year, Chief Financial Officer Bruce Tanner said during the earnings conference call.

Specifically, Tanner said growth in electronics systems sales would likely be lower in the second quarter as the year-ago quarter was boosted by sales of air defense and tactical missile products at a level not expected to be repeated. He also said growth in space systems could be down from the year-ago second period.

In the first quarter, the electronic systems, information systems and global services and space systems segments had higher sales, but sales fell 1 percent in aeronautics. All segments except space systems had higher operating profit.

Lockheed has remained profitable in the recession as the U.S. government continued to purchase equipment. But investors are concerned how the defense sector will fare given recent government proposals that would scale back key programs, such as Lockheed's F-22 fighter plane.

Tanner said that if recent proposals from Defense Secretary Robert Gates went on to win congressional approval, the company expects no change to its 2009 forecast and should be able to post year-over-year growth.

Lockheed is in pretty good shape, all things considered, said Wayne Plucker, senior aerospace and defense industry analyst at research firm Frost & Sullivan.

He said a downside for Lockheed over the long term could be a U.S. move, outlined in Gates' plans earlier this month, to hire more civil servants rather than contractors to do acquisition and procurement work.

The Bethesda, Maryland, maker of fighter jets and other military equipment said net earnings fell about 9 percent to $666 million, or $1.68 a diluted share, from $730 million, or $1.75 a share, a year earlier.

Analysts expected profit of $1.64 a share, according to Reuters Estimates.

Net sales rose 4 percent to $10.4 billion, below the $10.5 billion expected by analysts. Lockheed bought back 8.1 million shares for $555 million in the first quarter.

The company said a pension accounting adjustment had resulted in an expense of $114 million, which decreased net earnings by $74 million, or 19 cents a share. A year earlier, this adjustment resulted in income of $32 million, which boosted earnings by 5 cents a share.

Lockheed said it still expects pension expense of about $460 million to weigh on earnings for this year.

The company now expects profit of $7.15 to $7.35 a share for the full year, up from a January forecast of $7.05 to $7.25. Lockheed said the new forecast primarily reflects lower average shares outstanding as a result of stock buybacks.

Full-year sales are expected in the range of $44.7 billion to $45.7 billion, compared with 2008 sales of $42.7 billion. That forecast was unchanged from January.

Analysts expected profit of $7.37 for the year, according to Reuters Estimates.

Shares of Lockheed Martin closed up 31 cents at $76.04 on the New York Stock Exchange on Tuesday, while rivals Northrop Grumman rose 88 cents, or 1.9 percent, to $47.88, and Boeing Co gained 17 cents to $36.65. Lockheed's shares have fallen about 10 percent this year.

(Reporting by Karen Jacobs; Editing by Lisa Von Ahn, Derek Caney and Matthew Lewis)