Global defence squeeze dents BAE Systems' profits
Defence and aerospace firm sees profits drop in wake of cuts in US, UK
By Gaurav Sharma | CFO UK | Published 14:45, 21 February 13
UK aerospace and defence firm BAE Systems has posted a dip in pre-tax profits of over 6 percent to £1.37 billion for 2012, compared with £1.47 billion the year before.
In a trading statement on Thursday, the company also said its annual sales fell from £19.1 billion to £17.8 billion for the year. However, BAE Systems added that its order backlog rose 8 percent to £42.4 billion.
The company attributed the fall in full-year profits to weak global demand along with delays over a major contract to supply Saudi Arabia’s defence ministry with 72 Typhoon aircraft. Sales to the US, where defence cuts in the region of £350 billion have been forecast over the next ten years, also remained an area of concern.
On the positive side, the company inked major deals with the UK and Oman governments. BAE Systems said its outlook for 2013 was one of caution with a "constrained" US and UK market. The company forecasted "modest growth in underlying earnings per share" for the current year.
Nonetheless, BAE Systems announced a 4 percent increase in final dividend to 19.5 pence as well as a three-year share buyback programme worth around £1 billion. Last year, a failed merger with Airbus manufacturer EADS forced the company to revaluate its long-term strategy for growth.
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