Profits down and tough outlook for BAE Systems
DEFENCE manufacturer BAE Sytems which is cutting 1,400 jobs at its two biggest sites in Lancashire and has closed other facilities in the region, has reported a 7% fall in profits.
The group has been hit by continued cuts to military spending by the US and Britain, a delay in key orders and the end of the Iraq war.
It announced last autumn that it is looking to cut 1,400 jobs at its two manufacturing sites, Warton and Samlesbury near Preston, and while 700 people have volunteered to leave, compulsory redundancies have not been excluded.
The company posted ebitda of £2.02bn for the year to the end of December 2011. Revenues were down 14% to £19.15bn, primarily due to a cut in supply orders to the US army after it pulled out of Iraq and the delay of an order for 72 Eurofighter Typhoon jets by Saudi Arabia.
The company, which is also involved in the production of F-35 fighter jets and Astute class submarines, increased its dividend by 7.4% to 18.8p but said the outlook was uncertain.
Chief executive Ian King said: “BAE Systems is operating in a difficult business environment as defence spending reduces in its largest markets, the US and UK.
“Whilst little sales growth can be expected for the group in 2012 in the current market conditions, modest growth in underlying earnings per share is anticipated, assuming a satisfactory conclusion to Salam (Saudi Arabia Typhoon) negotiations in 2012 and excluding the benefit of a 2011 R&D tax settlement.”
BAE, which derives 47% of its revenues from the US and 29% from this country, has been hit by cuts to military spending as governments look to reduce their debts.
The US capped its military budget at last year’s levels for 2012, while Britain wants to cut defence spending by 8% over the next four years.
Despite the negatives the group said earlier this month it would recruit 136 apprentices at its submarine building business in Barrow. BAE, one of Barrow’s largest employers with more than 4,000 workers, said it was the highest intake for five years.
