19th Feb 2015 10:33
LONDON (Alliance News) - Aerospace and defence group BAE Systems PLC Thursday cited "marginally higher" earnings growth this year and said it expects US budget pressures to ease, after reporting a higher profit but a fall in revenue for 2014.
The FTSE 100-listed company reported an operating profit of GBP1.30 billion, up from GBP806 million in 2013. Underlying earnings before interest, taxes, and amortisation, which strips out one-off items, dipped to GBP1.70 billion from GBP1.93 billion last year, while revenue declined by 8.5% to GBP16.64 billion from GBP18.18 billion the year before.
The group said revenue was hit by adverse exchange rate movements, lower volumes in its Land & Armament business, and the previous year's boost from a one-off contract settlement with Saudi Arabia for the Eurofighter jet, Salam Typhoon.
The group reported underlying earnings per share of 38.0 pence for 2014, compared from 42.0 pence in 2013.
BAE Systems said the market is "competitive", but expects underlying earnings per share in 2015 to be "marginally higher" than in 2014, including some reliance on anticipated naval and aircraft orders.
It said it expects 2015 sales from its international Platforms & Services business to be some 10% higher than in 2014, buoyed by increased levels of support to the Salam Typhoon aircraft now in service and from higher volumes of weapon systems. It said its Platforms & Services business should see sales increase around 5% in the UK, but fall by 10% in the US, or by 8% on a like-for-like basis, excluding the disposal of its South African land business.
Margins are expected to be in a 6% to 8% range in the US in 2015, the group said, and at the lower end of a 10% to 12% range in the UK, due to higher UK pension service costs. In international, BAE said it expects margins to be broadly flat from 2014.
For the group's Electronic Systems division, BAE said sales in 2015 will be flat, with margins expects at the top end of a 12% to 14% guidance range. The Cyber & Intelligence division should see "mid-single digit" sales growth in 2015, with margins at the lower end of a 8% to 10% range.
"Looking ahead, defence spending remains a high priority in a number of international markets. In the UK, we benefit from long-term contracts, notwithstanding continued pressure on public spending. We believe US budgets are now relatively stable, with some early indications of a modest improvement in 2016," said Chief Executive Ian King in a statement.
BAE Systems said it continued to win new business throughout 2014, with over GBP10 billion of new orders from the UK and US, while its order backlog at the end of the year was GBP40.5 billion, compared to GBP42.7 billion in 2013.
BAE Systems returned a total of GBP925 million to shareholders in 2014 from its share repurchase programme and dividends. The group declared a total dividend per share of 20.5 pence for 2014, from 20.1 pence last year.
BAE Systems shares were down 0.2% at 521.00 pence Thursday morning.
By Rowena Harris-Doughty; [email protected]; @rharrisdoughty
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