BAE on track for double-digit EPS but warns about delays

10th Oct 2013 07:01

Defence group BAE Systems said it was on track for double-digit earnings per share in 2013, but warned it could take a hit from any delays in concluding a jet fighter deal with Saudi Arabia and a protracted US government shutdown.BAE said trading between July 1st and October 9th had matched management expectations at the start of August and the outlook remained unchanged.It expects double-digit earnings per share in 2013 including the benefit from the group's share repurchase programme and downside arising from reductions to US defence budgets.But it said any delays beyond the end of the year in agreeing a pricing deal with Saudi Arabia over the order for Eurofighter Typhoon fighter aircraft would affect earnings per share by about 6p to 7p.It also said that, while the US government shutdown so far had not affected its financial performance, failure to resolve the issue would cause "some progressive impact" to BAE's US operations.Since the October 1st shutdown, about 1,200 staff in BAE's intelligence and security and support businesses had been temporarily told not to report to work.The company was continuing to talk to the UK Ministry of Defence about a restructuring of its naval shipping business to meet future demand.Discussions are also underway regarding potential changes to the contract for the Queen Elizabeth Class aircraft carriers "to reflect the increased maturity of the programme". Ministers are pressing BAE to shoulder more of the cost of the project to help to reduce the UK's budget deficit. BAE said international market activity remained vibrant with multiple opportunities being pursued, including prospects in the United Arab Emirates to supply Typhoon aircraft and other capabilities. It had received £5bn of non-UK/US orders in the year so far. The Group has agreed with the trustees of its UK pension schemes to pay £340m into the plans over the three-year period of the share repurchase programme, thereby speeding up contributions under the existing multi-year recovery plans.PW