BAE System eyes further growth

British defence group BAE Systems today reported a 31% rise in annual earnings and said it expected a "further year of good growth" in 2009.

British defence group BAE Systems today reported a 31% rise in annual earnings and said it expected a "further year of good growth" in 2009.

BAE, which has benefited from an increase in military spending to support forces fighting overseas, said underlying earnings were £1.9bn (€2.16bn) in 2008, up from £1.45bn (€1.65bn) a year earlier.

The company's order book grew by 20% to £46.5bn (€53bn), helped by a 15-year UK munitions contract and further orders for land vehicles from the US military. The weakness of the pound against the US dollar also boosted the figure.

The company has successfully targeted the higher growth sectors of the US defence market, while the scale of recent military operations, including in Iraq and Afghanistan, has boosted its land systems operation.

BAE recently bolstered its exposure to the US with the acquisition of Armor, a major supplier of kit to the military and security forces.

Today's results were presented for the first time by Ian King, who stepped up from chief operating officer to replace Mike Turner as chief executive in August.

He said the company delivered a strong performance in 2008 and had good visibility going into this year.

Mr King added: "We have a clear long term strategy to develop the group in the defence, security and aerospace sectors."

The company reported an "exceptional year" at its land and armaments division, which provides and maintains armoured combat vehicles, artillery systems and missile launchers. It achieved sales of £6.41bn (€7.3bn) in the year, with like-for-like growth of 38% on a year earlier.

Underlying earnings from the division almost doubled to £566m (€645.1m), while its order book stood at £11.5bn (€13.1bn), against £7.3bn (€8.3bn) in 2007.

In the company's programmes and support division, which has 30,200 employees and comprises UK-based air and naval activities, sales were reduced to £4.64bn (€5.3bn) due to the phasing of its deliveries on the Typhoon fighter programme. Underlying earnings increased to £491m (€559.3m) from £456m (€519.4m).

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