BAE Systems sees profits and sales slump

By Hull Daily Mail | Posted: 1 Aug 2018

Profits and sales have slumped at aerospace giant BAE Systems, but the company has stood firm on hopes for a strong end to 2018.

The company, which has a factory in Brough and a training facility at Humberside Airport, saw profits fall 11 per cent to £792m in the first half of the year, as revenue also slipped to £8.2bn.

BAE remains confident the second half of 2018 will help profits recover however, with a contract in place to supply 24 Typhoon aircraft to Qatar.

Charles Woodburn, chief executive, said: “We have made good progress in the first half, strengthening the outlook through significant wins on the Australian SEA 5000 and US Amphibious Combat Vehicle programmes.

“These, combined with the launch of the UK Combat Air Strategy, provide good momentum into the second half and beyond.

“Operationally, there have been some notably strong performances in our Electronic Systems and Air sectors, but also some disappointments on certain long-standing programmes in Maritime and Platforms & Services (US), where we have now taken steps to strengthen management and improve programme execution.”

Sales at BAE fell by three per cent to £8.8bn in the first half of 2018 – a dip which the company blamed on reduced Typhoon production.

Despite the falls, BAE’s order backlog increased to almost £40bn, with £9.7bn of orders completed in the first half.

Prime Minister Theresa May last year ruled out an early order of Red Arrows planes, which would have helped save some of the 400 jobs being cut by BAE Systems.

Brough, at the time, built almost half of the Hawk aircraft on BAE’s order book. The aerospace company has since signed a contract with the State of Qatar to supply nine new Hawk aircraft for its air force.

“In this transition earnings year, our Group earnings guidance is maintained and, with a large order book and a positive outlook for defence budgets in a number of key markets, we have a strong foundation to deliver growth and sustainable cash flow,” Mr Woodburn said.

BAE also took a £15m hit when performance issues were found on HMS Forth, the first of five offshore patrol vessels being supplied to the Royal Navy.

It was reported in May that a number of defects were found on the £348m ship, just days after it had entered service.

Despite the drop in sales, profits and revenue, BAE said it expected its earnings for 2018 to be in line with the figure for 2017.

The latest figures comes nine months after BAE Systems announced 400 jobs were at risk in Brough - almost half the workforce - as it looked to scale down operations by November 2019.

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