01 Mar 2001
Ref: 027/2001
BAE Systems today announced preliminary results following its success in creating a well-balanced company underpinned by a strong order book, strong balance sheet and excellent cash generation.
- Profit, before interest excluding exceptional items and goodwill amortisation, of 950 million (1999 proforma 1,115 million)
- Order book 41 billion
- Earnings per share 19.2p
- Dividend per share 8.5p
A significant issue affecting the 2000 result was the major reassessment of the Nimrod maritime patrol aircraft contract, which resulted in a charge before tax for the year of 300 million. This had the effect of reducing diluted earnings per share from 25.8p to 19.2p.
The underlying profit for the year was 1.25bn, excluding exceptional items, goodwill amortisation and the Nimrod charge.
BAE Systems said that 2000 had been an exciting and exacting year in successfully bringing together the former British Aerospace and Marconi Electronic Systems to form a global systems, defence and aerospace company. BAE Systems stressed that the integration of the two companies was now delivering the planned synergies.
Chairman Sir Richard Evans said: "We have achieved our long-term objective of being positioned as a world-leading systems, defence and aerospace company. In the short-term we have had to face some challenges but have had some important successes as well. Following the acquisitions in the United States, the company has emerged as a significant competitor in this important market and the restructuring of Airbus into an integrated joint company will prove to be particularly valuable to BAE Systems shareholders."
Chief Executive John Weston added: "The integration has been a real success. We are, today, operating as one fully integrated company and achieving everything we set out to do in this regard. Looking ahead, BAE Systems is now a well-balanced company underpinned by a strong order book, strong balance sheet and excellent cash generation."
Cash performance across the business was strong with net operating cash inflows of 1.9bn. After the US acquisitions of the Control Systems and AES electronics businesses from Lockheed Martin for $2.3 bn (1.6bn) the resultant net indebtedness of the group at the year end marginally increased to 0.9bn.
The US acquisitions are a major step forward, further strengthening BAE Systems' position as a significant competitor in the key US defence market.
The order book was again strong at 41 bn benefiting from a 1.2bn contract to design, develop, manufacture, test and deliver the first Type 45 destroyers for the Royal Navy together with the strong market performance from Airbus.
Order intake from the UK Ministry of Defence is falling short of expected levels, which, with lower than anticipated Hawk export orders, is resulting in a lower level of activity. As a consequence, capacity - primarily in the Programmes business group - is being reduced with a restructuring programme resulting in exceptional charges to profits for 2000 and 2001.
This restructuring programme, which was announced in January 2001, will strengthen the business as it bridges the period between production of Tornado and Eurofighter Typhoon military aircraft.
BAE Systems has continued to make good progress with the rest of the business. The agreement with EADS to form an integrated joint company to manage the Airbus business became effective on January 1 2001.
Airbus is entering a phase of strong profitable growth built on a forward order book of some 1,626 aircraft valued at $121bn. Further growth will be achieved with the launch of the A380 family of very large, long-range aircraft seating 480/650 passengers.
The new Airbus company, into which BAE Systems is transferring its wing manufacturing facility in return for a 20 per cent interest, will generate substantial savings and enhance customer focus from a streamlined organisation and result in a very significant uplift in value for BAE Systems.
Looking to the future, the results in 2001, excluding restructuring provisions, are expected to be broadly unchanged compared with the underlying performance in 2000 before the Nimrod charge.
A resumption of earnings growth in 2002 and beyond is confidently expected as the company benefits from its investments in the US and from Airbus growth, together with the progression of Eurofighter Typhoon and naval programmes into the production phase.
About BAE SYSTEMS
BAE Systems, is the truly global systems, defence and aerospace company.
BAE Systems employs more than 100,000 people, in eight home markets around the world and has annual sales of some 12 billion. The company offers an unrivalled global capability in air, sea, land and space with a world-class prime contracting ability supported by a range of key skills.
BAE Systems designs and manufactures civil and military aircraft, surface ships, submarines, space systems, radar, avionics, communications, electronics, guided weapon systems and a range of other defence products.
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