Financial News

  • 21 February 2014, 9:39

BAE Systems Profit Drops 82% On Defence Cuts

Defence giant BAE Systems has seen its shares drop up to 9% after reporting a huge profit drop last year.

It said net profit slumped 82% last year amid large defence cuts, particularly in the US.

Profit after tax tumbled to 176m compared with 948m a year earlier.

It said it expected a further drop during 2014 of around 7.5% in its pre-tax earnings.

The fall came despite a 1.5% rise in sales to 18.18bn, with a boost coming from the price amendment for the 'Salam' Eurofighter Typhoon deal with Saudi Arabia.

The Middle Eastern country garners two-thirds of its business outside of the UK and US, at 6.4bn.

Its underlying operating profit fell by 50% to 806m, mainly on the back of an impairment charge of 865m of reducing its US business' value through government budgetary cuts.

Despite the cuts, it was able to maintain its order book at 42.7bn, flat on the 2012 figure.

BAE's best performing sector was its platforms and services UK - responsible for the Salam project - which saw revenues up 21% to 6.9bn, with earnings up 26% to 879m.

Its worst results came from the cyber and intelligence group, where revenue was down 11% to 1.2bn and earnings were down 7% to115m.

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