Defence giant BAE warns of further cuts

DEFENCE giant BAE Systems posted a net loss for 2009 as it warned of the impact of future cuts to defence budgets.

The group, which employs 11,500 staff in the North West, recorded a full year loss of £45m compared to a profit of £1.7bn last time, mainly due to huge impairments. It made a pre-tax profit of £282m, compared with £2.3bn in 2008.

The figures were dented by a £973m impairment charge at its Armor Holdings business following the loss of a US contract for further orders of military vehicles.

BAE also recorded a £278m charge relating to fines it paid to the UK and US authorities to settle allegations that it failed to provide accurate records in connection with the supply of an air-traffic control system to Tanzania.

Sales rose 21% to £22bn and earnings before interest, tax, depreciation and amortisation were up 17% to £2.2bn.

BAE said it anticipates growth for three of its four divisions next year, while sales at its land and armaments business will improve as rationalisation and efficiency programmes progress.
 
For 2010, despite a planned lower level of land vehicle activity, BAE expects to see growth at constant exchange rates. However, it warned that cuts in government spending will lead to further efficiency savings at the group.

“Defence budgets in both the UK and the US are expected to come under further pressure, and with expectations of a more challenging business environment ahead, the focus on driving performance and efficiency in the business will be key. Cost reduction measures are being aggressively implemented across the group.”

Earlier this month BAE announced plans to cut 270 jobs at its sites in Barrow and Oldham. This followed more than 1,000 cuts in September when it announced the closure of its factory at Woodford, near Stockport, and job losses in Lancashire.

The dividend for the year increased by 10% to 16p.