Aircraft

BAE Systems has posted a 17% year-on-year increase in 2005 sales on the back of ongoing success with the UK defence ministry (MOD) and a positive contribution from Airbus.

The successful integration of US-based United Defence contributed to 2005 sales of £15.4 billion ($28.6 billion), boosting its position in the US market, which accounts for more than one-quarter of total sales.

BAE’s profits were up 16% to £1.2 billion. The group is forecasting improved 2006 performance from its defence business with “modest organic growth” in 2006. BAE is continuing to look at potential acquisitions in the US, confirms chief executive Mike Turner. But he remains cautious: “we have no intention of spoiling the good progress we’ve made by overspending on acquisitions.”

Success in Saudi Arabia is also contributing to the group’s solid performance. The customer solutions & support division saw steady sales of £2.9 billion in 2005. Turner adds that the first deliveries of Eurofighter Typhoon aircraft could begin as early as 2008, but it will be “towards the end of this decade before the bottom line of BAE benefits from any exports to the kingdom.”

BAE’s commercial aerospace division’s sales were up from £2.9 billion to £3.2 billion on record Airbus orders. But Airbus’s performance was not enough to offset the impact of losses in the regional aircraft division, and commercial aerospace profits fell £22 million to £179 million. The group expects losses in the regional aircraft support business to continue this year, but chief financial officer George Rose forecasts growth in profits for commercial aerospace as a whole in 2006.

Turner describes the company’s 20% Airbus stake as “a very very good investment for our shareholders,” and adds that there are no short-term plans to sell it. But “we look at the long-term profitability of all our businesses every year and review whether they are going to be held or sold – it is the same for every business.”