Defence group boosts figures and pension plans

Charles Woodburn

BAE Systems, the defence group which employs around 15,000 staff in Lancashire and Cumbria, reported better revenues and profits for 2019.

Sales of £20.109bn were an improvement on the previous year’s £18.407bn, while pre-tax profits of £1.532bn compared with £1.033bn the previous year.

The group operates factories in Warton and Salmesbury, near Preston, building military aircraft, and a submarine building facility in Barrow.

During the year the group had an order intake of £18.4bn, and currently has an order backlog of £45.4bn.

It also announced that, after consultation with the The Pensions Regulator in the UK, the group has reached agreement with the Trustee Board of the combined pension scheme on the accelerated funding valuation and a revised deficit recovery plan.

At the October 31, 2019, funding valuation date, the deficit was £1.9bn.

The current deficit recovery plan, which runs to 2026, will be replaced by a new deficit recovery plan, under which a one-off payment of £1bn is to be made in the coming months, with approximately £240m of funding payable in the scheme year ending March 31, 2020, and approximately £250m by March 31, 2021.

The group has set a final dividend of 13.8p, making a total of 23.2p per share for the year, an increase of 4.5% over 2018.

Looking ahead, the group said for the year ending December 31, 2020, its underlying earnings per share is expected to grow by mid-single digit percentage compared with the full-year underlying earnings per share in 2019 of 45.8p, assuming a $1.30 to sterling exchange rate.

The guidance is based on the measures used to monitor the underlying financial performance of the group.

Chief executive Charles Woodburn said: “2019 has been a year of significant progress for BAE Systems.

“We delivered a good set of financial results in line with guidance, growing sales and earnings, with improved operational performance and increased investment in the business to underpin our growth outlook.

“Strategically we took a number of actions to strengthen the portfolio and the pensions agreement announced today is good for all stakeholders.

“These will help to accelerate our strategy and further our growth outlook.”

He added: “We have a large order backlog and remain focused on strong programme performance to deliver a sustainable business model with enhanced financial performance.”

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