19 Feb 15. BAE announces Results. “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. 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 Group is well positioned to continue to deliver shareholder value.” Ian King, Chief Executive, BAE Systems.
KEY POINTS
FINANCIAL
* Sales were £16.6bn. The year-on-year reduction of £1.5bn 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.
* Underlying EBITA was £1,702m. The year-on-year position was broadly unchanged after allowing for exchange rate translation and the one-off 2013 price settlement.
* Margin performance delivered a return on sales of 10.2%.
* Underlying earnings per share increased from 37.6p to 38.0p after excluding the benefit from the price escalation settlement in 2013.
* £925m returned to shareholders in 2014, from share repurchase programme and dividends.
* Large order backlog of £40.5bn.
OPERATIONAL
* Acceleration of capability expansion on the Typhoon aircraft with commitments to additional weapons integration and E-Scan radar.
* Major milestone achieved with naming and float-up of HMS Queen Elizabeth aircraft carrier. Over £1bn of Royal Navy contracts awarded.
* Contract award received for the US Armored Multi-Purpose Vehicle, creating a new franchise.
* Selected to provide the integrated flight control electronics and other systems for next-generation Boeing 777X aircraft.
* US-managed business streamlined to improve competitiveness.
* Operational progress made, but further charges taken, on US commercial shipbuild contracts.
* BAE Systems Applied Intelligence delivered organic sales growth of 10%, driven by growth in commercial cyber security. Order backlog increased 37%.
* SilverSky acquisition completed, enhancing the Group’s strategy to grow the commercial cyber business.
(See Feature www.battle-technology.com: BAE SYSTEMS – IN LINE AND LOOKING FORWARD POSITIVELY, By Howard Wheeldon, FRAeS, Wheeldon Strategic Advisory Ltd.)
19 Feb 15. BAE Systems sees recovery in defence budgets. BAE Systems sought to dampen concerns over the future for UK defence spending after May’s general election as it signalled the eight-year downturn in US military cuts appeared to be at an end. “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,” said Ian King, chief executive, adding that there were signs that US defence cuts had bottomed out. “We believe US budgets are now relatively stable, with some early indications of a modest improvement in 2016,” he said, adding that the group had won more than £10bn of new orders from the UK and US for the third successive year. He was speaking as the world’s third largest defence group revealed a near 12 per cent fall in its full-year underlying earnings before interest, tax and amortisation to £1.7bn on sales that fell 8.5 per cent to £16.6bn. At the operating level, profits were largely in line with expectations of £1.3bn on sales of £16.8bn. Thursday’s results show the group, which relies on North America for more than a third of sales, is still suffering the pain o