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BAE outlook 'cautious' as profits drop
DEFENCE giant BAE Systems has reported a fall in full-year profits, but said the order book is looking healthy.
The company, which has UK sites in Samlesbury and Warton, blamed delays over a major contract with Saudi Arabia and weak global demand for the dip in profits.
Pre-tax profits fell more than six per cent to £1.37bn, compared with £1.47bn last year. Sales also fell from £19.1bn to £17.8bn for the year to 31 December 2012.
But BAE, which makes the Typhoon jet fighter, said its order backlog rose eight per cent to £42.4bn.
It also cheered shareholders by announcing a four per cent increase in final dividend to 19.5p.
The company said the outlook for 2013 remained cautious, saying it expected ‘modest growth’ and a ‘constrained’ US and UK market.
Chris Boardman, managing director for BAE Systems military air and information, said: “We are in a good state in a very difficult environment, because despite a tough economic climate, we have secured new contracts for Typhoon and Hawk.
“We are delivering against our customer and shareholder promises and at the same time laid great foundations for the future.
“We are working on a number of campaigns to bring more work in.”
In December 2012, BAE won a £2.5bn aircraft contract with the Royal Air Force of Oman to provide 12 Typhoon fighter jets and eight Hawk advanced jet trainer aircraft.
BAE’s deal to supply Saudi Arabia with 72 Typhoons has hit trouble following disagreements over the final contract price, while in the US, where BAE derives 40 per cent of its revenues, the defence budget is being cut by £320bn over the next decade.
BAE has warned it will be forced to cut 3,500 jobs in the US if the threat of Pentagon spending cuts becomes reality.
The company has also been under pressure to develop an alternative growth strategy following the collapse of its planned merger with European defence company EADS in 2012.
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