Profits stall as cuts bite at BAE Systems

An F35 and two Typhoons in flight
An F35 and two Typhoons in flight
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Defence giant BAE Systems, which employs 5,500 on the Fylde, saw its half-year sales fall 10 per cent to £7.6bn.

The company, which has engineering sites at Warton and at Samlesbury, near Preston, saw operating profit for the six months to July down to £689m from £752m for the same period last year.

However, its interim dividend was increased by 2 per cent to 8.2p per share, with £618m returned to shareholders in the period,

The company remained bullish despite its warning earlier this year that profits would be hit by cutbacks in US defence spending.

Ian King, chief executive, said: “Operationally, the group continues to perform well, benefiting from good programme performance on its large order backlog of almost £40bn.

“We continue to see a high level of activity in international markets, including from our substantial presence in the Kingdom of Saudi Arabia, while the US and UK environments remain more 

“Sales are anticipated to be weighted towards the second half of 2014, including the timing of Typhoon aircraft deliveries. We are finalising a further £1.3bn of international orders and are at an advanced stage of negotiations on a further £1bn of UK sole source naval contracts.

“Excluding the impact of exchange translation, the group remains on track to deliver earnings in line with our expectations for the full year.”

Chris Boardman, Managing Director for Military Air and Information, said: “The market for air defence 
products and services remains highly competitive.

“We are responding to this challenge by enhancing our offering while continuing our focus on cost.

“We have been delighted to see the development of capabilities on Typhoon which will make it even more attractive in the international market.

“As always, we are looking to the future and the success of Taranis has positioned us as an attractive partner for any unmanned air programme 
going forward.”

BAE said its major milestones achieved in the six months included the float-up of aircraft carrier, HMS Queen Elizabeth, the UK government’s commitment of £72m to further Typhoon aircraft capability development with the electronic scanning radar, progress in future combat air technologies with successful flight trials of the Taranis unmanned combat air vehicle and a UK/French government commitment to develop a joint Future Combat Air System.