has just announced its year end results for 2010 returning to a net profit, but warning of the impact of defence budget cuts in Britain and the United States. Earnings after tax hit £1.05 billion ($1.69 billion, €1.25 billion) last year, compared with a net loss of £67 million in 2009.
The 2009 shortfall was caused by a major write-down linked to the purchase of US military group Armor Holdings. Earnings before interest, tax, depreciation and amortisation (EBITDA) — a measure of underlying profitability — rose by just 0.8 percent to pound2.21 billion. Revenues meanwhile edged 1.8 percent higher to pound22.39 billion.
“It is expected that pressures on defence budgets, particularly in the US and UK, will continue,” said the company,
BAE said it has cut about 15,100 jobs, including contractors, over the past two years as it has tried to offset government spending cuts around the world. The group’s order book shrank 14 percent to pound39.7 billion last year, with further reductions expected in 2011.
Stock market reaction was swift, with the share price falling 4.92 % to 338.20 pence on London’s FTSE 100. Analysts expect that 2011 will be a very tough year for the defence industry and due to the (UK) government’s recent spending cuts, BAE will be a victim of weak organic growth for the next four years or so.