BAE Systems wary of looming defence cuts

DEFENCE giant manufacturer BAE Systems, which is one of the region’s largest private sector employers,  said it had returned to profit during the first half, but warned of “challenging trading” ahead as governments axe spending.

BAE Systems’ net profits of £618m in the six months to June 30, compared with a loss of £82m last year, when it reported huge impairment charges on its acquisition of US company Armor Holdings

Turnover at the company, which employs nearly 13,000 in the region making the Eurofighter Typhoon jet at locations near Preston, Lancashire, and submarines and howitzer guns in Barrow, was up 9.3% to £10.6bn from £9.7bn last time.

The company said in a trading update: “The group anticipates a challenging trading environment as governments look for cost savings to address budgetary pressures and enhance value for money. A substantial programme of cost reduction and efficiency improvements is already well underway within the group to address such issues.

“This cost reduction programme, including a net headcount reduction of 3,300
during the first half year, will be of sustained benefit to the group’s performance. It will also enhance competitiveness and deliver further improved value for customers,” BAE Systems added.

BAE Systems said last year it would close its Woodford site near Stockport when a service and repair contract with the Ministry of Defence for Nimrod spy planes ends.