BAE ‘in good shape’ despite profit fall
DEFENCE giant BAE Systems says its UK business is “in good shape” and has a stable outlook, despite Government spending cuts.
In the year to December the group, which is a major regional employer, saw underlying earnings before interest, tax and amortisation (EBITA) grow by 3% to £1.92bn on revenue of £18.18bn, up 2%.
However, pre-tax profits fell from £1.2bn to £422m largely due to a £865m goodwill impairment relating to its US Intelligence and Security and Land and Armaments businesses as a result of an estimate of reductions in US defence spending.
The company said the results had benefited from a pricing agreement on the sale of 72 Typhoon jets to Saudi Arabia. Negotiations over the £4.4bn Salam deal had dragged on for several years.
BAE employs around 15,000 people in the North West at sites in Lancashire, Cumbria and Cheshire. It has 10,000 people making military jets at Samlesbury and Warton in Lancashire. A further 5,000 work on nuclear submarines in Barrow in Furness, and 450 at a munitions plant at Radway Green, Crewe. Overall the group employs 220,000 people around the world with 48,000 in the UK.
It said the UK business was concentrated on a small number of large programmes where multi-year contracts “provide good visibility”.
Chief executive Ian King said: “Overall, the group delivered a solid performance in 2013, against the background of reduced government spending and challenging market conditions. A proactive focus on costs and enhanced competitiveness protected our margins across the majority of the business and we secured further contract wins in the US, Saudi Arabia and internationally.
“We have started 2014 with good momentum with a settlement on Salam pricing, US budgets in place and a well-defined UK Maritime sector plan. Budget pressures in some of the group’s larger markets are expected to prevail but BAE Systems has a broad-based portfolio. Our strong order backlog and robust balance sheet provide a solid basis for growth over the medium term.”
The full year dividend has increased by 3% to 20.1p per share.
