BAE reports £67m net loss for 2009, announces £500m buyback
BAE Systems said on Thursday it expects growth in 2010 despite a reported tumble in pretax profits and a net loss for 2009. The defence giant said the loss is due to exceptional charges and financing adjustments and its shares rose 4.3 per cent to 364p as news of a share buy-back and dividend-hike were announced the same day.
BAE said its net loss for 2009 was £67m, compared with a profit of £1.75b in 2008. Sales rose 21% to £22.42bn from £18.5bn, and earnings before amortisation and impairment of intangible assets, finance costs and tax in 2009 climbed 17% to £2.2bn from £1.9bn in 2008.
Ian King, BAE chief executive, said that the group faces challenges in its land and armaments business in the US. Its decline in profits is partly attributed to a £973m impairment charge at its Armor Holdings business after the loss of a US Department of Defense contract to supply trucks for the US Army.
BAE generates 58% of its sales in the US and agreed to pay a $400m fine to the US Department of Justice after it was charged with making false statements in regulatory filings. Profits were also hurt by £278m of exceptional charges relating to a deal struck in February to end corruption probes by the Serious Fraud Office in the UK and the US Department of Justice.
Mr King said the £500m share buy-back programme did not mean an end to growth at the group. He highlighted the company’s role in the growing areas of cyber security, combat aircraft and unmanned air vehicles, and warned against “a knee-jerk position”.
The group’s order book edged up slightly to £46.9bn from £46.5bn in 2008. In the same period, operating profit almost halved, falling from £1.72bn to £982m.
