Demand for armoured vehicles boosts BAE Systems

DEFENCE giant BAE Systems said high demand for its armoured vehicles, which are used in Iraq and Afghanistan, has boosted business at the group.

In a statement to the stock market, BAE Systems said trading from July 1 to October 14 was consistent with management expectations, and its land and armaments business was benefiting from increased demand.

The group, which is currently “fully co-operating”  with the Serious Fraud Office as part of the probe into a deal to sell Saab Gripen fighter jets to South Africa in 1999, and denies any wrongdoing, employs 15,000 at sites at Woodford near Stockport, Chadderton, Salmesbury, Preston and Barrow.

BAE Systems said it generated £132m from the completion of the BVT surface shipbuilding and naval support transaction on the disposal of the group’s interests in the businesses it contributed to the joint venture. A further £56m was gained from the sale of the company’s interest in Flagship Training Limited to VT Group.

A significant proportion of the group’s profits is derived in US dollars and is translated into sterling at the average exchange rate for the period. BAE Systems said while it’s EBITA is benefiting from the US dollar/sterling exchange rate movements, the group’s net cash has been adversely impacted by exchange rate movements in its US dollar denominated borrowings.

The group added that its offer for Detica Group, which valued the business at around £545m, was declared wholly unconditional. The acquisition is expected to achieve a return in excess of cost of capital within three years of the deal completing.

BAE Systems will announce it preliminary results on February 19.