BAE Systems posted a 3% fall in first half profit, hit by a delay in the completion of a key deal with Saudi Arabia as well as lower spending by European and American military.

Europe's largest defence contractor on Thursday reported earnings before interest, taxes and amortisation (EBITA) of 939 million pounds ($1.46 billion) in the six months to the end of June on sales 10% lower at 8.33 billion pounds.

BAE, which makes Tornado fighter jets and is part of the Eurofighter consortium, said it expected to deliver some growth in the full year subject to the completion of the Saudi deal.

“Modest growth in underlying earnings per share is anticipated, assuming a satisfactory conclusion to the Salam pricing negotiations in 2012,” the company said in a statement.

Saudi Arabia - the world's top oil exporter - signed a contract with BAE in 2007 to buy 72 Typhoon aircraft, 24 of which have been delivered to the Royal Saudi Air Force. The Salam deal, as it is known, is worth around 4.5 billion pounds.

Talks between BAE and Saudi Arabia over changes to the price of the deal are expected to be completed in the coming months.

The company, which will build Britain's next generation of nuclear-armed submarines, increased the interim dividend by 4% to 7.8 pence per share.

 

Source: Reuters