31st Jul 2014 07:15
LONDON (Alliance News) - BAE Systems PLC Thursday said that it remains on track to deliver earnings in line with its expectations for the full-year and increased its interim dividend, as it reported a drop in sales and operating profit in its first-half.
In its first-half results for the six months to June 30, 2014, the defence, security and aerospace company reported sales of GBP7.61 billion, down from the GBP8.49 billion reported for the comparable period last year.
Operating profit also declined, coming in at GBP689 million from GBP752 million in 2013.
Pretax profit, however, shows a marginal rise for the period, coming in at GBP541 million from the GBP521 million recorded in 2013. The defence company has increased its interim dividend to 8.2 pence per share, up from the 8.0 pence paid on the comparative last year.
BAE said basic earnings per share rose to 13.5 pence for the half-year, up from 12.7 pence.
Looking ahead the FTSE 100-listed company said it is performing well, recording an order backlog of GBP39.7 billion, though this is down on the GBP42.7 billion recorded for the half-year in 2013. Around half of the order backlog comes from the Platforms & Services (UK) sector, said BAE, which comprises the Group's UK-based air, maritime, combat vehicle, munitions and certain shared services activities. The division logged an order backlog of GBP20.4 billion for the period.
"Operationally, the Group continues to perform well, benefiting from good programme performance on its large order backlog... We continue to see a high level of activity in international markets, including from our substantial presence in the Kingdom of Saudi Arabia, while the US and UK environments remain more constrained," said Chief Executive Ian King.
In the past BAE has been hit by defence spending cuts in both the UK and the US, so while the
company's half-year results are encouraging and are supported by its GBP40 billion order book, the results are from a low base and have also faced an adverse translational impact due to the strength of sterling.
BAE said sales are anticipated to be weighted towards the second-half of 2014, including the timing of its Typhoon aircraft deliveries. The company is also currently finalising a further GBP1.3 billion of international orders and are at an "advanced stage of negotiations" on a further GBP1 billion of UK sole source naval contracts, it said.
However, the company warned that due to the non-recurring benefit from the Salam price escalation settlement in the second-half of 2013, and before exchange translation, it continues to expect reported earnings per share to be some 5% to 10% lower than in 2013.
Earlier this year the firm received a boost after the announcement that the governments of the UK and Saudi Arabia had finally reached a deal on higher prices for the Typhoon jets that Saudi Arabia ordered back in 2005.
Exchange translation, assuming an average USD1.70 exchange rate, is expected to impact those earnings by around one pence compared to previous guidance, said the company.
Excluding the impact of exchange translation, King said that the group remains on track to deliver earnings in line with BAE's expectations for the full-year.
The company also said Thursday that it has entered an agreement to acquire Signal Innovations Group, an imaging technologies and analytics provider to the US and intelligence and defence communities.
No financial terms of the deal were disclosed. BAE said the proposed acquisition is conditional on certain regulatory approvals and it anticipated to be completed during the third quarter of 2014.
The company said Tuesday that it will partner with Mach 1 Development in order to enhance its data security management offerings in a deal that will see BAE's SIBA data collaboration and dissemination tool linked with Mach 1's DocuTRACER document watermarking solution.
Shares in BAE Systems were Thursday trading 0.99% higher at 429.20 pence per share shortly after the market open.
By Alice Attwood; [email protected]; @AliceAtAlliance
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