BAE Systems stays bullish despite cuts
BAE SYSTEMS remains bullish in the face of looming government spending cuts, after posting a 14 per cent rise in first-half earnings yesterday to swing back into profit.
The firm’s chief executive Ian King said: “The group anticipates a challenging trading environment as governments look for cost savings to address budgetary pressures and enhance value for money,” but added he expects growth during 2010.
The company was looking to expand in emerging markets to compensate for defence spending cuts in the UK and US, which make up 70 per cent of total sales. King said: “If you look at Brazil, it’s a big economic powerhouse and it’s looking to spend money on defence. In terms of defence spending I would say that it’s got to be top of the list.”
He said BAE saw unprecedented levels of interest from Middle Eastern and Asian governments at last week’s Farnborough airshow.
BAE signed a £500m deal with India last Wednesday to supply 57 Hawk jets, which
came as part of Prime Minister David Cameron’s delegation to the country. However, its order book now stood at £43.6bn, down £700m on last year.
Europe’s largest arms firm posted underlying earnings of £1.11bn, on sales nine per cent higher at £10.64bn, for the six months to the end of June.