Defence giant BAE Systems has issued a warning that its profits would continue to remain under pressure due to cuts in defence budgets in the US and the UK.
For the last year, BAE announced pre-tax profits of £1.4 billion, down from £1.5 billion from the previous year. Revenues slipped 7 per cent, from £19.2 billion to £17.8 billion.
Underlying earnings before interest, taxation & amortization (EBITA) slipped from £2.02 billion in 2011 to £1.9 billion in 2012.
U.K. defense giant BAE Systems PLC on Thursday rose up to caution against the 2010 growth rate. It expects the witness a lower than estimated growth rate for BAE, citing strategic changes introduced in the defense-spending review conducted by the British government.
The company explained that the SDSR will pose a considerable impact on its UK arm, resulting in a squeeze in the earnings of over 1p a share. However, it insisted that it can assist the government to meet its efficiency targets.
Following the government‘s review on the defense spending of the country, shares for BAE Systems dropped by a damaging 3%. The stock for BAE witnessed a fall of 12.3p to a share value of 351.6p; the shares fell for a second consecutive day, as the shares for BAE had seen a drop of 2% on Tuesday night.
The market in London as a whole, seemed nervous about the future of the index as the government was about to announce the allocation of funds in the coming five years. Despite the panicky atmosphere, the FTSE Index managed to hold with grit and witnessed a drop of just 7 points.
As per a complex deal, BAE Systems will buy a segment of L-1 Identity Solutions that will eventually lead to the sale of the US defence group to French rival Safran for $1.6bn.
The three units of L-1: Spectal, Advanced Concepts and McClendon have been priced at $296m.
Spectal is a private intelligence consulting business with some of the staff members from CIA and FBI. Advanced Concepts offers IT services to the military and to Government intelligence organizations and geographical imaging services is provided by McClendon.
The British defence company BAE System has declared about its plans of selling the parts of its US aerospace business. The BAE Systems has instructed the Wells Fargo and JP Morgan to guide the company over its Platform Solutions business.
According to reports the sale will generate 1.3 billion pounds for the defence firm. Experts say this move of selling assets is a result of the cuts in defence spending in both the UK and US.
After Sunday’s report in The Mail, reporting the plans, BAE Systems, the British Defense Group confirmed it saying that it is planning a sale of parts of its commercial aerospace business in North America, the support business Platform Solutions, in order to focus on the maintenance. To complete the process, BAE Systems hired Wells Fargo and JP Morgan as advisors.
BAE Systems believe that the Company would be sold for up to $2 billion. During that deal, the defense group would be cutting around 740 jobs at the UK military aerospace business.
After hearing the reviews of the Government’s spending in defense section, BAE Systems has announced on Thursday that it is planning to cut off its 740 jobs in the military aerospace business in Britain.
"We have made an announcement within our UK Military Air Solutions business this morning which relates to the beginning of a consultation process around a proposed 740 job losses from five of our UK sites”, said BAE Spokeswoman said on Thursday.
BAE Systems swerve back into the gaining position during the first half, supported by a sturdy concert from its crutch and services functions, but also swayed warning signals of a demanding trading atmosphere as government's hunts for cost savings to deal with the budgetary force.
According to the Europe's biggest defense contractor, building incisive-class submarines and Euro fighter Typhoon jet aircraft on Thursday that a considerable agenda of cost diminution and effectiveness development was previously under way to tackle these issues.
BAE Systems has officially unveiled a share buy-back plan of as much as 500 Million Pounds. The official announcement came on Thursday, almost 15 days after publically acknowledging a deal to close two corruption investigations.
In addition, the defense contractor reported a yearly pre-tax profit of 282 Million Pounds, down from 2008's figure of 2.37 Billion Pounds.
A former Austrian agent for British defence contractor BAE Systems has been charged with corruption.
The Serious Fraud Office charged 56-year-old Alfons Mensdorff-Pouilly for bribing government officials in Hungary, Austria and the Czech Republic in return for contracts for Gripen fighter jets.
The SFO said that the British defence company was still under probe for its alleged involvement in suspected corruption in Eastern Europe, South Africa and Tanzania.
BAE Systems, Europe's largest defence company, has been pushing the Serious Fraud Office to re-open settlement talks over corruption charges.
Shares in BAE Systems have plunged due to the defamed bribery case, which alleged that the arms manufacturer greased the palms of countries such as South Africa, Tanzania and Romania in order to get defence contracts.
People familiar with the issue said that BAE Systems still hoped for a settlement deal, though it had been repeatedly saying that it had not done anything wrong.
UK prosecutors will reveal today the result of its inquiry into the charges of corruption and bribery laid on defense and aerospace group BAE Systems.
The BAE Systems has been facing charges for allegedly greasing the palms of many countries including Czech Republic, Tanzania and Romania, in order to get contracts.
As per lawyers BAE Systems could face penalties between £500 million and £1 billion in case it ever found guilty.