BAE Systems may cut jobs to offset falls

City A.M. Reporter
BAE Systems may be forced to cut more staff this year to help offset lower 2011 sales, which it still expects to be hit by reduced UK military spending and weakness at its land and armaments unit.

“The group continues to anticipate a reduction in sales in 2011 as the volume adjustment in land and armaments is expected to complete and as the changes arising from the Strategic Defence and Security Review reduce activity in the UK businesses,” BAE said yesterday.

Europe’s biggest defence contractor said in February that it expected full-year revenues to be hit by weakness at its artillery and armoured combat vehicles unit, which accounts for around a quarter of group profits.

“Actions to lower cost and improve efficiency are expected to benefit return on sales and mitigate the impact of that lower activity,” the company added.

BAE, which is involved in the production of F-35 jets and submarines, has cut around 15,000 employees in the last two years to lower costs.

Britain last year slashed its defence budget by eight per cent to help reduce its budget deficit – cutting its army, navy and air force – hitting arms makers such as BAE, which makes around a fifth of revenues in the UK.