BAE Systems confident for second half of the financial year
BAE Systems has seen revenues and profits fall in the six months to June 30, its results revealed today.
The group, which operates bases at Warton and Salmesbury in Lancashire, posted revenues of £8.161bn, compared with £8.915bn last year, while operating profits came in at £792m, down from £885m, as defined by IFRS2 guidelines.
In financial measures defined by the group, sales of £8.818bn fell from £9.467bn the previous year.
The group said its order backlog during the period increased to £39.7bn, with £9.7bn of orders in the first half.
The order backlog does not yet include the initial contract on the SEA 5000 programme, or the contract for the supply of Typhoon and Hawk aircraft to Qatar, both of which are expected in the second half of the year.
The 3% fall in sales, on a constant currency basis, is as a result of reduced Typhoon production activity, it said.
Underlying EBITA of £874m was down 6%, on a constant currency basis.
The group’s share of the pre-tax accounting net pension deficit reduced to £3bn, compared with £3.9bn at December 31.
Chief executive Charles Woodburn said today: “We have made good progress in the first half strengthening the outlook through significant wins on the Australian SEA 5000 and US Amphibious Combat Vehicle programmes.
“These, combined with the launch of the UK Combat Air Strategy, provide good momentum into the second half and beyond.
“Operationally, there have been some notably strong performances in our Electronic Systems and Air sectors, but also some disappointments on certain long-standing programmes in Maritime and Platforms & Services (US), where we have now taken steps to strengthen management and improve programme execution.”
He added: “In this transition earnings year, our group earnings guidance is maintained and, with a large order book and a positive outlook for defence budgets in a number of key markets, we have a strong foundation to deliver growth and sustainable cash flow.”
Looking ahead, the group expects its underlying earnings per share for 2018 to be in line with the full-year underlying earnings per share for 2017, with some small additional benefit from exchange translation.
And it said while there is no change to group-level earnings guidance, some programme execution issues encountered on certain long-standing programmes in Platforms & Services (US) and Maritime in the first half are expected to be covered primarily by higher earnings in the Electronic Systems business and the Cyber & Intelligence sector.
The group’s interim dividend has been increased by 2% to 9p per share.
