22 Feb 2007. The FT Reported that rapid growth in its US-based business and the sale of its stake in Airbus helped BAE Systems lift profits by more than 50 per cent last year, the defence and aerospace group said on Thursday.
“BAE Systems delivered another year of good financial performance, underpinned by programme schedule and cost adherence across the group,” the company said in a statement.
Revenues for the year ending in December rose 9.4 per cent to £13.8bn, while pre-tax profit surged 54 per cent to £859m. Operating profit rose 33 per cent to £1.2bn. BAE raised its dividend 9.3 per cent to 11.3p per share. Basic earnings per share rose from 13.9p to 19.9p.
BAE is refocusing on core activities and in May it sold its 20 per cent stake in Airbus. It intends to re-invest the money in its business and buy back up to £500m of its shares.
Land and Armaments, the US-based division, was the fastest growing unit with sales jumping 67 per cent to £2.1bn. The division focuses on artillery and missile launchers and also includes United Defense, acquired in June 2005. United Defense makes the Bradley armoured vehicle, widely used in Iraq and Afghanistan,
In the UK, sales were helped by the delivery of 113 Typhoon and 28 Hawk aircraft. In shipbuilding, BAE has already launched two of four Type 45 destroyers and is working on the remaining two. Work has also begun on two of the four Astute class submarines.
Outlook
Looking forward to 2007 the compoany anticipates a further year of good growth led by the US businesses, in particular from the Land & Armaments sector, and from further progress in the Programmes business.
BAE Systems delivered another year of good financial performance, underpinned by
programme schedule and cost adherence across the Group and reflecting the
benefits now flowing from our world-class Lifecycle Management and Performance
Centred Leadership processes.
Sales increased 9% from £12,581m to £13,765m. Organic growth was 5%. Sales in the full year from the former United Defense activities, acquired in June 2005, were £1,670m (2005 £789m).
EBITA2 increased 33% to £1,207m (2005 £909m). The growth includes the benefit of
a full year’s trading from the former United Defense activities, acquired in
June 2005, which contributed EBITA2 of £169m (2005 £60m) in the year. As reported at the half year, included within EBITA2 is a £61m one-off accounting gain in the Electronics, Intelligence & Support business group arising from a
reduction in the net pension liability following the changes to the calculation of final US pensionable salaries. Losses at Regional Aircraft amounted to £114m, these are reported within HQ and other businesses.
Return on sales (EBITA2 adjusted for uplift on acquired inventories expressed as a percentage of sales) for the Group increased from 7.6% to 8.8%. Return on sales excluding the one-off pension gain referred to above was 8.3%.
Order book increased to £31.7bn, primarily on US awards in the Land & Armaments
business and on securing the Availability Transformation – Tornado Aircraft
Contract (ATTAC) in Customer Solutions & Support.
The performance of the US businesses has again been excellent with the Group’s
expansion in the US market over recent years generating good returns. Good progress has continued in the UK businesses with programmes on track and meeting their key milestones.
A number of export opportunities have also progressed, most notably in the
Kingdom of Saudi Arabia where, under an agreement between the Kingdom of Saudi
Arabia and the UK government, the Group is working to modernise the Saudi armed
forces including progressing towards a contract for 72 Typhoon aircraft.
We have continued to divest those businesses that were non-core to our strategy.
In May the Group initiated the sale of its 20% shareholding in Airbus. The decision to sell the Airbus stake was consistent with our strategy of maximising value fro