BAE boosted by £2.1bn Typhoon contract

BAE Systems, headquartered at Salmsbury near Preston, says its trading has been consistent with management expectations helped by its contract signed in July to build the Eurofighter Typhoon – expected to be worth £2.1bn over 10 years.

Ahead of its full year results due at the end of December, BAE said the UK Success Submarin production programme had started with the first steel cut yesterday (Wednesday October 5) with about £1.3bn of funding committed for the initial production award.

The company is progressing defining an overall Type 25 build contract and a contract is being finalized for the fourth and fifth new River Class Offshore Patrol Vessels.
 
BAE said the US the defence market outlook remains positive and the production ramp up on a number of the group’s long-term programmes “is progressing to plan”.

“A Continuing Resolution went into effect on October 1 under which the group does not expect any material disruption in the near term,” it said.
 
“In August we delivered ship six under our commercial shipbuilding contracts. The remaining two ships are expected to be completed in 2017.

“In our ship repair business the additional dry dock capacity for the San Diego operations remains on track to be operational in early 2017.

“Export activity continues to be supported by the UK government and, although there can be no certainty as to the timing of orders, discussions with current and prospective operators of the Typhoon aircraft continue to support the Group’s expectations for additional Typhoon contract awards.”

 In its latest trading update, BAE reported underlying earnings per share of 40.2p excluding tax provision releases of 4.3p per share, and adjusting for a 0.7p per share benefit from an assumed US$1.45 to sterling translation rate.