BAE Systems sees upturn in 2015 as hopes rise of defence spending increase

Joseph Millis
BAE hopes that Typhoon sales will take off this year on the back of geopolitical friction
British weapons-maker BAE Systems is gambling on securing the sale of more Typhoon fighters as well as naval orders this year amid belief that the worst was over for spending cuts in its key US market.

Profits at the world’s third-largest defence contractor by revenue have been hit in recent years by government spending cuts, particularly in the US and Britain, which together account for almost two-thirds of its sales.

However, it said U.S. spending was now stabilising and set to improve “modestly” from next year.

Chief executive Ian King said he was encouraged by a recent order for F-35 combat jets, which BAE is a key development partner of.

He also suggested the company could benefit from heightened military activity, when asked about the battle against Islamic State in Iraq and rising tensions in Ukraine. “Defense and security is high on governments’ priorities at the moment,” he added.

BAE said underlying earnings before interest, taxes, and amortisation, which strips out some one-off items, fell to £1.70bn in the year to end-December from £1.93bn the previous year on a 8.5 per cent decline in revenue to £16.63bn.

Shares closed up 0.67 per cent yesterday on the news.

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