UK: BAE Systems Delivers Robust Performance in 2012

BAE Systems has yesterday, February 21, announced the full year results. The Group continues to deliver a robust performance with strong trading in a number of areas.

Financial key points:

• Sales £17,834m
• Underlying EBITA £1,895m
• Underlying earnings per share 38.9p
• Order backlog £42.4bn
• Non-US and UK order intake £11.2bn
• Dividend per share 19.5p
• Operating business cash flow £2.7bn
• Net cash £387m
• Three-year share repurchase programme of up to £1bn
• Longevity risk on £2.7bn of pension scheme liabilities transferred to the insurance market

Maritime

Cumulative savings of £342m have been reported to the MoD against commitments made under the 15-year Terms of Business Agreement (ToBA), significantly ahead of target. In line with the ToBA, the Group is progressing discussions with the MoD regarding future shipbuilding strategy after completion of block build for the Royal Navy’s new aircraft carriers, and as the business transitions to the design and manufacture phase of the Type 26 Global Combat Ship.

The largest hull section of the first of the Royal Navy’s new aircraft carriers, the Queen Elizabeth, has been delivered to Rosyth for assembly with the other completed hull sections. Block manufacture for the second ship, Prince of Wales, is well underway. BAE Systems and its Aircraft Carrier Alliance partners are working to finalise the detailed design changes required for operation of the short take-off and vertical landing variant of F-35 Lightning II on the carriers.

Defender, the fifth Type 45 destroyer, was accepted by the Royal Navy in July. The final ship, Duncan, has undertaken her sea trials and is on schedule for delivery in 2013. The Type 45 support contract met all ship deployment dates during the year.

Settlement with the Government of the Republic of Trinidad and Tobago, in respect of the cancelled OPV programme, was reached in November at an amount consistent with provisions held. In January 2013, £101m of the £131m cash settlement was paid, with the remainder due in May 2013. Following the agreement in December 2011 for the sale of the OPVs to the Brazilian Navy, the first two vessels were delivered in the year, with the third ship due for delivery in 2013.

Following an incident at sea during gunnery trials on the first Khareef Class corvette for Oman, detailed engineering, schedule and contract reviews have resulted in revised delivery dates for the ships. This has resulted in an increase in costs to complete the contract. The ships are expected to be delivered in 2013 and 2014.

The Type 26 Global Combat Ship assessment phase contract continues and is intended to be completed by the end of 2014. The Type 26 is planned to replace the Royal Navy’s Type 23 frigates.

Australia

Integration of the first of two Landing Helicopter Docks commenced at the Williamstown shipyard following the arrival of the hull from subcontractor Navantia in Spain. The second hull was launched at Navantia’s Ferrol shipyard.

A total of nine hull blocks have been constructed and delivered under the A$209m (£134m) Air Warfare Destroyer contract, completing the Group’s involvement in the first two ships of the three being built.

“BAE Systems continues to deliver a robust performance with strong trading in a number of areas. Our geographic diversity is providing resilience and in particular, we have made excellent progress in international markets achieving a non-US and UK order intake of £11.2bn. This has resulted in an 8% increase in our order backlog to over £42bn. We have closed the year with a strong balance sheet and are well positioned for the future,” says Ian King, Chief Executive, BAE Systems.

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Shipbuilding Tribune Staff, February 22, 2013