BAE Systems trading in line with expectations

8th May 2013 07:35

BAE Systems said trading has been consistent with management expectations in the first four months of the year and the outlook for earnings growth remains unchanged. The British multinational defence, security and aerospace company anticipates a modest rise in earnings this year, subject to US defence budgets. In February, the US Navy announced possible changes to a number of ship availability contracts due to uncertainty surrounding its budget.BAE Systems consequently issued notices about the possible lay-off of nearly 3,600 employees in the group's US ship repair business.Funding legislation passed in March 2013 alleviated the impact of the notices but financing for certain ships remains unclear so site-specific workforce adjustments may be required.In March, the group won a contract from the US Army valued at up to $780m over five years to continue the operation and management of the Holston Army Ammunition Plant in the US.In the UK, pressure on government spending also continues. However, the defence equipment environment remains stable with no material changes to programmes, many of which are subject to long-term contracting arrangements.During the period, the second of seven Astute class submarines was commissioned into the Royal Navy and the sixth and final Type 45 destroyer was handed over to the Ministry of Defence.BAE is continuing its talks with the UK government to balance naval surface shipbuilding capacity in the nation with future warship demand in accordance with the terms of business agreement signed in July 2009.In another milestone for BAE, the company agreed a five-year partnership with Vodafone to provide businesses with a range of advanced communications security products and services, initially focused on smartphones and tablets. The group added that the international market remained strong with a further £2.3bn on non-UK/US orders received in the year to date.A £0.6bn weapons contract was awarded under the Saudi British Defence Co-operation programme in March and discussions are ongoing with the Saudi Arabia government relating to the formalisation of price escalation on the Salam Typhoon project. The firm also completed the sale of its Commercial Armored Vehicles business in West Chester, Ohio, to The O'Gara Group for $10m in February.Shares rose 0.80% to 377.70p at 08:04 Wednesday.RD