BAE Systems reports drop in sales of 14 per cent for 2011

The defence company, Britain’s largest engineering employer, has increased its dividend payment by 7.4 per cent but warned of modest sales growth in the next financial year.

Ian King, chief executive officer, said the impacts of defence cuts in Britain and the US had been expected across the company but that it had positioned itself to mitigate against these through aggressive cost reductions, good programme execution and its presence in a number of territories.

In the UK, King said 2010’s Strategic Defence and Security Review led to a £500m reduction in the group’s annual sales but workforce reductions, (including contractors), facility rationalisation and contract settlement agreements had helped to offset this.

The winding down of US military operations in Iraq, coupled with delays to the US defence budget have also made a negative impact.

Profitable areas
Underlying profit before tax stood at £1.8bn compared to £1.98bn in 2010.

Measures to boost future profitability include growing BAE Systems’ international business, developing cyber, intelligence and security, and electronics systems businesses in both civil and defence, and delivering savings across its products and services.