18th Feb 2016 09:14
LONDON (Alliance News) - Defence contractor BAE Systems PLC on Thursday said recovering global defence budgets should result in higher earnings in 2016, even though pretax profit was given a one-off boost in 2015 by aircraft deliveries to Saudi Arabia.
The FTSE 100-listed engineering group said its underlying earnings per share in 2016 should be around 5% to 10% higher than in 2015, helped by defence budgets increasing around the world and by growing sales in its cyber security and international sales, which will offset declines in the US and UK.
Pretax profit for BAE rose to GBP1.09 billion in 2015 from GBP882.0 million in 2014, helped by a rise in revenue to GBP17.90 billion from GBP16.64 billion and lower impairment and amortisation charges.
Underlying earnings before interest, tax and amortisation, however, dipped to GBP1.68 billion from GBP1.70 billion, hit by a slowdown of Typhoon production and by impairments related to its Australian shipyard business restructuring. The underlying number strips out non-recurring items.
Sales were boosted in the UK from higher aircraft deliveries to Saudi Arabia, which provided a GBP800.0 million one-off boosts to revenue, along with the trading of equipment for the Eurofighter Typhoon fighter jet programme and increased activity for its naval business.
The company won a series of contracts over the course of the year, including a deal to develop and manufacture a next-generation digital electronic warfare system for the US Air Force, along with major contracts from the Royal Navy in the UK and a major night vision goggle and weapon sights deal with the US Army.
BAE closed the year with GBP36.8 billion on its order book, down from GBP40.5 billion though the group said the figure remains robust and gives it confidence on its outlook.
BAE said it will pay a final dividend of 12.5 pence per share, taking its total dividend to 20.9p, up 2.0% year-on-year from the 20.5p it paid in 2014.
"We have delivered another year of solid performance. BAE Systems has a large order backlog generated by a well-balanced portfolio of businesses serving the needs of customers in many of the world's larger accessible markets," said Chief Executive Ian King.
"The group is well placed to continue to generate attractive returns for shareholders as defence budgets recover and our commercial adjacencies of cyber and commercial electronics continue to grow," King added.
BAE shares were up 1.6% to 507.24 pence on Thursday morning, one of the best performers in the FTSE 100.
By Sam Unsted; [email protected]; @SamUAtAlliance
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