STRONG SHOWING BY BAE LED BY ARMOURED VEHICLES
01 Aug 08. Commenting on these results, Chief Executive Mike Turner said:
“We have once again delivered a robust performance across our operations and this is delivering sustainable growth in shareholder value and long-term benefits for all our stakeholders. The implementation of our global strategy and consistent programme delivery continues to drive growth across our home markets. We have excellent forward visibility from a large order book and together with our realistic planning assumptions this provides us with confidence for future growth.”
HIGHLIGHTS
1. Another robust financial performance across the businesses
– Underlying earnings per share increased by 14% to 17.5p
– Total Sales growth of 12.5% to £7,751m
– EBITA up 26% to £881m (2007: £700m)
– Interim dividend increased by 16% to 5.8p
2. £41 billion order book with significant additional order intake in the period provides long-term visibility of earnings, based on robust, realistic assumptions
– Strong growth has again been achieved in the land systems sector
– Annualised turnover has increased from $1 billion in 2004 to in excess of $10 billion today
– Follow on awards for MRAP and major contract awards for FMTV
– Continued demand for Urgent Operational Requirements to support the UK’s armed forces in Iraq and Afghanistan
3. Continued progress towards growth across home markets including through merger and acquisition
– Acquisition of MTC Technologies Inc gives opportunities for growth in US readiness and sustainment market, complementing support activities in other home markets
– Tenix Defence acquisition doubles BAE Systems’ presence in the Australian market and establishes the Group as the largest in-country defence supplier to the Australian Defence Force
– Formation of surface shipbuilding and naval support joint venture company – BVT Surface Fleet
– Proposed acquisition of Detica
4. The Company is also pursuing opportunities to establish an industrial presence in additional markets including in India, Japan and Korea
5. The Company is committed to implementing the recommendations of the Woolf
Report and achieving benchmark standards of governance in the conduct of its day-to-day business
6. Appointment of Ian King to succeed Mike Turner as Chief Executive with effect from 1 September 2008
The FT reported that BAE Systems reported a 26 per cent rise in first-half profits and offered a confident outlook for the year, saying it would continue to benefit from strong demand for armoured vehicles.
The company beat analysts’ expectations, announcing earnings before interest tax and amortisation for the six months to June 30 of £881m, including an exceptional profit of £61m on the disposal of a business. Pre-tax profit grew to £791m from £657m last year.
Sales were up 12 per cent to £7.75bn. The group also posted a record order book of £41.1bn, up from £31.7bn the year before.
Presenting his last results before retiring as chief executive, Mike Turner said the results were “underpinned by consistently good programme management” and gave the company ”excellent future visibility”.
The stellar performer was BAE’s land systems division, which saw its sales increase from £1.2bn to £2.59bn. Armoured trucks and mine-resistant vehicles have been a sweet spot for the defence industry, with the ground wars in Iraq and Afghanistan driving demand for better troop protection.
BAE has benefited from several orders in recent months, notably from the US. It had now received orders for more than 5,000 vehicles, Mr Turner said. Mr Turner retires from BAE at the end of August and will be replaced by Ian King, chief operating officer.
Underlying earnings per share for the period were up 14 per cent to 17.5p. BAE