BAE’s pension deficit grows in first half
DEFENCE giant BAE Systems said yesterday its pension deficit had ballooned by 30 per cent to more than £3bn in the first half due to bond and inflation volatility.
The group saw a net loss of £70m for the six months to January, down from a profit of £599m in the same period last year.
“We expect good growth for 2009 as a whole, despite a lower level of land vehicle sales,” the group said.
The news overshadowed a sharp rise in interim earnings to nearly £1bn, while the firm also said it expected good growth for the full year.
BAE, which generates over half its sales from the United States, said underlying earnings came in at £979m for the first half, up from £820m a year ago.
Operating profit slumped to £500m from £789m, which the group put down to exceptional items including a writedown on recent acquisitions.
Earlier this week, the group of seven countries backing the troubled Eurofighter Typhoon project, which BAE is helping to build, agreed to continue their funding.
Chief executive Ian King said the Typhoon and the Joint Strike-Fighter (J-SF) would be the main drivers for growth in the medium term.
The Eurofighter project will up the group’s orders by £2bn, he said. BAE’s order book for the period was £45bn, up from £41.1bn a year earlier.
“The mix of the results are a bit different to what was expected,” Nick Cunningham, an analyst at Evolution said.
“There were very strong UK programmes but international margins are down,” he added.