BAE Systems confident despite fall in sales

BAE Systems, Warton.
BAE Systems, Warton.
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PLANEMAKING giant BAE Systems today reported a fall in sales of £18.1bn to £16.6bn in its annual report

But it said its underlying earnings before profit, tax and other deductions in 2014 were largely in line with the previous year.

And it had a “strong” backlog of £40bn of orders which gave it confidence for the future.

BAE Systems employs more than 13,000 people within its Military Air and Information business at Warton, Samlesbury, Brough and another 30 locations around the UK.

The group said the reduction in sales reflected £0.6bn of adverse exchange rate translation, the expected volume reductions in Land & Armaments and the previous year’s benefit from the one-off price settlement for Salam Typhoon

The underlying year-on-year earnings position was broadly unchanged after allowing for exchange rate translation and a one-off 2013 price settlement.

Chris Boardman, Managing Director of BAE Systems Military Air and Information, said: “In 2014 we made real progress on our key programmes with acceleration of capability expansion on the Typhoon aircraft, successful completion of the second phase of flight testing on the unmanned combat demonstrator Taranis and continued delivery on the F-35 Lightning II programme.

“ We also secured contracts to continue the vital support we provide to the Royal Air Force’s fleet of Typhoon and Tornado aircraft and welcomed the UK and French Government’s two-year feasibility study on Future Combat Air System technology. Although we continue to operate in a challenging environment I am confident we have the skills and ability to continue to meet these challenges and deliver against our commitments”.

Chief Executive Ian King said: “In 2014, BAE Systems delivered a solid overall performance, in line with guidance.

“We continue to win significant new business with over £10bn of new orders from the UK and US for the third successive year.

“As a result, the large order backlog of £40.5bn continues to provide good, multi-year visibility across many of our businesses.”

Mr King added: “”Looking ahead, defence spending remains a high priority in a number of international markets. In the UK, we benefit from long-term contracts, notwithstanding continued pressure on public spending. We believe US budgets are now relatively stable, with some early indications of a modest improvement in 2016.

“These are competitive times and we will continue to invest in and develop the technology, skills and market positions needed to drive the business forward.”

The figures come days after BAE Systems secured a five-year contract worth £18.5 million to provide ground support equipment, spares, and training for the Lancashire-built Hawk jet trainer in India.