BAE warns over tough trading

City A.M. Reporter
Europe's biggest defence contractor BAE Systems warned that serious flooding at one of its plants in the United States and uncertainty over federal budgets may disrupt sales and trading.

"The group is assessing the implications of serious flood damage at its Johnson City electronics facility following recent severe weather along the U.S. east coast. This may result in some sales deferral to 2012, but is not expected to be material to this year's earnings," BAE said in a statement.

The British group said trading since 1 July had been in line with management expectations and that it still expected underlying earnings per share for the year to be broadly similar to 2010's restated earnings.

"Some near-term disruption to trading is anticipated as the US administration again operates federal budgets under a Continuing Resolution," BAE said.

The company also noted "significant uncertainty" over future defence spending in the United States.

U.S. Defence Secretary Leon Panetta said on Tuesday that the Pentagon would have to cut outlays on personnel, benefits and equipment as it makes difficult choices required to reduce security spending by £288bn over the next decade.