BAE Systems profit up 16% |
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Fri, 24 Feb 2006 06:35
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LONDON: BAE Systems Plc., Europe's largest defence group, posted a 16 per cent increase in its earnings before interest, taxes and amortisation at 1.182 billion pounds for the year ended December 2005, thanks mainly to increased defence spending in the U.S. and the U.K., and higher orders for Airbus planes.
Its net income increased to 553 million pounds or 17.4 pence a share, from 2 million pounds a year earlier (due to charges involving write off of EuroSystems and goodwill impairment).
The company's sales for the year rose 17 per cent to 15.4 billion pounds, which included sales of U.S. firm United Defense Industries, which it acquired in 2005.
BAE Systems hopes to derive benefit from the cooperation between the U.K. and the government of Saudi Arabia. Britain has agreed to replace Saudi Arabia's aging Tornado aircraft with Eurofighter combat planes and BAE is a partner in the Eurofighter programme.
The company's profit at its commercial aerospace division declined because of a wider loss at its regional jet unit. However, the division benefited from record orders of Airbus planes in 2005. Airbus is 80 per cent owned by European defense firm EADS and 20 per cent by BAE Systems.
The company said it has finalised a plan under which it will make one-off cash contribution of 350 million pounds into its pension fund, which is facing a substantial deficit -- 4.7 billion pounds in 2005 the main fund accounting for 2.4 billion pounds. It intends to cover 60 per cent of the deficit by transferring cash and property to the scheme's assets and will also increase its contributions.
Chief Executive Mike Turner said he expects an improved 2006 performance, especially in the defence business and the company will be able to reap full year of income from the $1.1 billion acquisition of United Defense Industries.
Airbus had a record 1,055 plane orders in 2005 with air travel expanding in Asia, especially India and China.
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Defense firm BAE reports 20% rise in profits 