BAE predicts strong growth

Defence equipment manufacturer BAE Systems has predicted strong growth for the remainder of 2009, despite poor sales of land vehicles.

The group said that trading from June to October was in line with its expectations and has forecast a stronger operating cash inflow in the second half year.

The underlying interest charge is expected to increase in 2009 as a result of the cash cost of business acquisitions made in 2008 and the lower level of interest received on cash held.

Demand for Electronics, Intelligence and Support (EI&S) has also been forecast to remain strong on the back of significant contract wins.

In September, BAE Systems was one of two companies selected to participate in contract with a maximum value of £1.2bn for the Driver’s Vision Enhancer range of infrared sensors that provide 24-hour, all-weather visibility to operators of ground vehicles.

However, despite an upbeat forecast, BAE is anticipating a reduction of its Military Air Solutions business as a result of the closure of its Woodford site at the end of 2012. It added that additional job losses could result from the closure of three further sites resulting in an expected 1,100 job losses in the UK over the next three years.

Additional losses are expected as a result of the US Department of Defense’s (DoD) decision not to award BAE a build-to-print contract for follow-on production of vehicles under the Family of Medium Tactical Vehicles (FMTV) programme. BAE said it intends to protest this decision.

In a trading update, the group said: ‘The implications for the group cannot be fully assessed until the outcome of this protest has been determined… should the group’s protest at the loss of the contract be unsuccessful, significant impairments would result.’