SHARES in BAE Systems, the biggest private employer in East Lancashire, rose yesterday as the company signalled it would weather government spending cuts impacting the sector.

The defence and security giant, which employs around 4,500 people at its Samlesbury site, makes a wide variety of military equipment including Astute nuclear-powered submarines, areoplanes and land vehicles.

The main two projects in East Lancashire are the Eurofighter Typhoon and F-35 Joint Strike Fighter jets and staff also work on Tornado maintenance.

The firm offset a drop in earnings in the six months to June 30 by hiking its dividend by seven per cent and announcing the purchase of £500 million of its shares.

BAE's share price was up five percent at one stage yesterday as analysts described the pay-out as reassuring at a time of poor sentiment towards the defence sector.

With the company having to grapple with the implications of defence spending cuts in the UK and the United States, BAE has cut hundreds of jobs at its Lancashire plants, which also include Warton, over the last two years in order to boost competitiveness.

However, it has also looked to target faster growing markets such as cyber and intelligence products and high-end electronics.

In line with its warning earlier this year that sales would be lower in 2011, BAE said revenues fell 13 per cent to £9.2 billion in the six months to June 30. Underlying earnings were 12 per cent lower at £968 million after a charge of £160 million to cover the cost of an offshore patrol vessel project.

BAE has generated a number of opportunities in the United States despite budgetary pressures. BAE is also working to boost its presence in India where defence spending is also expected to grow substantially.

Chief executive Ian King said the figures represented a "robust" performance in a challenging market environment.

He said: "The company is resilient and has performed well. We continue to pursue the fast lanes of growth in the areas of military and technical services, cyber and intelligence and high-end electronics."