05 Apr 13. Lagardere has confirmed its intention to sell its stake in European aerospace and defence giant EADS by the end of July. The French multinational company has made no secret of its wish to get rid of its 7.5 per cent stake in EADS, the parent company of plane maker Airbus and arch rival of U.S.-based Boeing Co. In a statement Friday, Lagardere says a “substantial portion” of the proceeds will be distributed to its shareholders. No further details were disclosed. The opportunity to sell the stake came last year when France and Germany agreed to shake up EADS’ shareholding structure to reduce government influence. (Source: AP)
03 Apr 13. Defense Company Stocks Have Soared Since Sequester’s Ax Fell. While the S&P is up 3.7 percent and the Dow Jones industrial average has risen 4.3 percent, Boeing has jumped 9.6 percent, Lockheed Martin is up 8.3 percent. Northrop Grumman has climbed 6.1 percent and Raytheon is up 6 percent. The jump in contractors’ shares prices is seen as a relief rally after the protracted uncertainties of the sequester debate, but the longer term impact of the cuts is still controversial. No major defense layoffs tied to the sequester have been announced under the Worker Adjustment and Retraining Notification (WARN) Act, despite predictions during the heat of the 2012 presidential campaign when companies pressed Congress to turn off the automatic cuts. (Source: glstrade.com/The Hill.com)
03 Apr 13. MoD outsourcing set to boost Babcock. Babcock International Group’s bid pipeline has grown from £14bn to £15.5bn since the end of January, and the engineering support company expects to benefit further in the coming years from outsourcing at the Ministry of Defence. In a pre-close trading statement released on Wednesday the company, which generated over half of its £3.1bn revenues in 2012 from the MoD, said it remained on course to deliver results in line with expectations for the year ending 31 March 2013, and had maintained its order book at £12bn, having dropped from £12.5bn in the second half of 2012. Analysts highlighted the potential for further cuts to the UK defence budget as a key source of risk for the company in the coming years, but chief executive Peter Rogers said austerity at the MoD would also provide Babcock with opportunities. (Source: FT.com)
28 Mar 13. Boeing Defense Sales Gain 38% as Rivals Feel Pinch of U.S. Cuts. Boeing Co.’s defense contracts soared 38 percent last year to $28.7bn, while awards to other top vendors declined as the Pentagon cut purchases. The gain for Boeing, the No. 2 defense contractor, was driven by a $4.2bn order for F-15 jets from Saudi Arabia, which counts as a U.S. contract because the Pentagon manages such foreign arms sales. Most of the top 10 U.S. military vendors reported a decline in contract values or saw awards figures stay stagnant as total Pentagon spending on contracts fell 3.1 percent to $361bn in fiscal 2012, from $372bn the prior year, according to data compiled by Bloomberg. Awards to Lockheed Martin Corp., the world’s largest defense contractor, fell 12 percent to $30bn, and third-ranked General Dynamics Corp.’s contracts fell 27 percent to $13.9bn. Boeing’s defiance of the decline in contract spending has helped boost its share price 14 percent this year, compared with a 9.3 percent rise in the Standard & Poor’s 500 Index. A Bloomberg index of the top 10 Pentagon suppliers has climbed 8.7 percent. Foreign sales of aircraft will propel Boeing’s fortunes over the next several years, helping to ease the pain of lower U.S. spending, said Cai von Rumohr, an analyst at Cowen & Co. in Boston. Even so, he estimates that the company’s defense sales will decline by about 5 percent this year.
“Even with it growing, is it enough to outweigh the downtrend in U.S. business? The answer is no,” he said in a telephone interview.
The Pentagon is absorbing cuts of $46bn by Sept. 30, its share of automatic reductions in a process known as sequestration