BAE results beat expectations

BAE Systems has reported second half profits up 29% despite lower defence sales and higher costs in repayments of launch aid.

The company saw net income up to £234m in the second half of the year, on sales up 10% over the same period to £4.84bn. Margins have been boosted by cost cutting across the group. Pre-tax profit before exceptionals for the full year were up 11.6% to £790m, just topping analysts’ forecasts. on sales of £8.93bn. Total orders at the end of the year stood at £36.6bn for the group, including £8.5bn with Marconi.

BAE said integration of Marconi Electronic Systems was making progress and that it expected to meet its anticipated cost savings of £275m within three years.

BAE’s commercial aerospace division, which is dominated by its wing manufacturing operations for Airbus Industrie, showed an operating loss of £10m compared with a profit last year of £12m. Sales rose 17.7% to nearly £3bn, though analysts have pointed to the intense price war with Boeing which has hit margins within Europe’s commercial aerospace partners. Deliveries of Airbus reached 294 this year, beating Boeing for the first time.

BAE has also faced higher repayments to the UK government this year of launch aid granted for two of the Airbus programmes.