Sales will fall says BAE after profits rise
BAE Systems, the international defence contractor, has reported a slight increase in annual profits but warned that sales will fall this year.
The weapons, submarine and aircraft maker which announced in December that it was cutting 950 jobs across its sites in the North West as a result of Government spending cuts, said earnings in 2010 rose 0.8% to £2.21bn on turnover up 1.8% to £22.39bn.
Growth was driven by efficiency savings and growth in its services and international businesses.
BAE said it expected sales to fall this year as a consequence of defence spending cuts in the US as well as its home market.
“In 2011, a reduction in sales is anticipated as the volume reduction in land and armaments is expected to complete and as the changes arising from the Strategic Defense and Security Review reduce activity in the UK businesses.
“Continuing actions to reduce cost and improve efficiency are expected to benefit return on sales and mitigate the impact of that lower activity, ” it added.
Last year the coalition government slashed its defence budget to help reduce the country’s huge budget deficit. Among the local casualties was the contract to upgrade the Nimrod search and rescue aircraft.
This has seen nine newly-refurbished Nimrods starting to be scrapped at the BAE factory in Woodford near Stockport before re-entering service.
Axing the Nimrod programme will save the government around £2bn over the next decade, but has been criticised as ‘perverse’ be some defence chiefs.
BAE Systems has sites at Crewe, Chadderton, Barrow, and Samlesbury and Warton in Lancashire and is one of the largest manufacturers in the North West.
