Defence budgets squeeze BAE

Chris Boardman, managing director of Military Air and Information at BAE Systems
Chris Boardman, managing director of Military Air and Information at BAE Systems
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The boss of defence giant BAE Systems in Lancashire has said the group is “in a good state in a very difficult environment.”

Chris Boardman, managing director of the company’s Military Air and Information (MAI) division, said the firm’s success in landing new orders for its Eurofighter Typhoon and Hawk jets had boosted its finances.

However, the group still reported a six per cent reduction in profits on Thursday citing a the squeeze in defence budgets in the United Kingdom and United States.

BAE employs 11,000 people at its fighter jet-building factories at Warton and Samlesbury, near Preston, which build and assemble aircraft including the Typhoon and Hawk.

Mr Boardman 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, which are predominantly international.”

The company reported its pre-tax earnings for 2012 was £1.89bn, down from £2.02bn the previous years.

It cited cuts in the United States’ military budget and unresolved discussions over a key contract for its flagship Eurofighter Typhoon jet with Saudi Arabia for the fall.

Chief executive Ian King said the group had delivered “robust performance” and hailed £11.2bn of orders it secured outside its ‘home markets’ of the UK and US.

He said: “Our geographic diversity is providing resilience and in particular, we have made excellent progress in international markets.

“This has resulted in an eight per cent increase in our order backlog to over £42bn.

“We have closed the year with a strong balance sheet and are well positioned for the future.”

In a statement on Thursday, the group added: “Growth opportunities in some segments of the US and UK markets are identified, but the overall outlook in both countries is expected to continue to be constrained.”