BAE stung by cuts

Posted on 22 Oct 2010 by The Manufacturer

BAE Systems has said that cuts announced in the strategic defence review would cost it £48m after the MoD cancelled a large number of orders, including some for the latest version of the Nimrod reconnaissance plane.

The company said that it would see its annual earnings fall 1p a share from 2011 from 44p a share in 2010. This corresponds to a pre-tax profit of £2.1bn a year in 2010.
Other major hits include the early retirement of the Harrier jet and the cutting back of orders for the Joint Strike Fighter.

However, BAE will benefit from other government decisions, including the retention of the £5.2bn order for two aircraft carriers, and deals for seven nuclear Astute-class submarines. In addition, BAE will be paid cancellation fees for projects that have been cut.
BAE has already cut 7,000 jobs this year. It could face an unexpected £150m shortfall in its 2010 accounts this year if its dispute with the Trinidad and Tobago government over contracts for three patrol ships is not settled in the company’s favour.