BAE's pension deficit grows in first half

DEFENCE giant BAE Systems said yesterday its pension deficit had ballooned by 30 per cent to more than &pound;3bn in the first half due to bond and inflation volatility.<br /><br />The group saw a net loss of &pound;70m for the six months to January, down from a profit of &pound;599m in the same period last year.<br /><br />&ldquo;We expect good growth for 2009 as a whole, despite a lower level of land vehicle sales,&rdquo; the group said.<br /><br />The news overshadowed a sharp rise in interim earnings to nearly &pound;1bn, while the firm also said it expected good growth for the full year.<br /><br />BAE, which generates over half its sales from the United States, said underlying earnings came in at &pound;979m for the first half, up from &pound;820m a year ago.<br /><br />Operating profit slumped to &pound;500m from &pound;789m, which the group put down to exceptional items including a writedown on recent acquisitions.<br /><br />Earlier this week, the group of seven countries backing the troubled Eurofighter Typhoon project, which BAE is helping to build, agreed to continue their funding.<br /><br />Chief executive Ian King said the Typhoon and the Joint Strike-Fighter (J-SF) would be the main drivers for growth in the medium term.<br /><br />The Eurofighter project will up the group&rsquo;s orders by &pound;2bn, he said. BAE&rsquo;s order book for the period was &pound;45bn, up from &pound;41.1bn a year earlier.<br /><br />&ldquo;The mix of the results are a bit different to what was expected,&rdquo; Nick Cunningham, an analyst at Evolution said.<br /><br />&ldquo;There were very strong UK programmes but international margins are down,&rdquo; he added.