BAE Systems sales to slip in 2011

17th Feb 2011 07:02

Defence firm BAE Systems is expecting sales in 2011 to dip as cutbacks in government spending start to bite.The company saw sales edge up by 1.8% in 2010 to £22,392m from £21,990m in 2009. The market had pencilled in a figure of £22,548m for sales. Profit before tax from continuing operations was £1,027m, compared to a loss of £61m in 2009.Underlying earnings before interest, tax and amortisation improved to £2,214m from £2,197m the year before, while underlying earnings per share (EPS) climbed to 40.8p, versus market expectations of 41.85p, from 40.1p the year before.Earnings per share may have been a bit lighter than the market was expecting but the company has been unexpectedly generous on the dividend front, bumping the full year pay-out to 17.5p from 16.0p in 2009; the market had been expecting a figure around the 17p mark.Net debt at the end of the year stood at £242m, versus a positive balance of £403m at the end of 2009.Though the company is braced for a reduction in sales volumes as a result of the changes arising from the Strategic Defence and Security Review it expects to mitigate the effects of this through actions to reduce cost and improve efficiency.The group has reduced headcount, including contractors, by around 15,100 in the last two years.Furthermore, the 2011 results will benefit from the non-recurrence of the £100m charge taken in 2010 in respect of the terminated Trinidad and Tobago ship contract.The group said 2011 performance is expected to be weighted to the second half of the year."With the re-basing of the Land business in 2011, and the cost and efficiency actions, the group will have established a resilient platform for future growth," the company said.