Europe's biggest defense contractor is still waiting on securing the new aircraft orders it needs to meet its annual earnings target, BAE Systems explained on Thursday.
In reporting a 3% slip in first-half earnings per share, BAE maintained its forecast given in February that for 2015 underlying earnings per share would be marginally higher than the 38 pence per share it made in 2014, depending on whether it secured "anticipated" new aircraft orders, which are most likely to come from Saudi Arabia for the Eurofighter Typhoon.
Saudi agreed to buy 72 Typhoons from Britain in 2007 but there have been no new orders for the jet since Oman's in 2012. The Typhoon is a joint project between BAE Systems with partners Airbus Group and Finmeccanica.
Chief Executive Ian King confirmed on a call with reporters that sales campaigns were underway.
“There are a number of active campaigns and a number of potential customers and I think we've been clear that the Middle East is an area where there are requirements,” he said.
Meeting forecasts is also dependent on a review of options for a shipyard in Australia, where it could take a provision, estimated by UBS analysts to be between 50 and 60 million Pounds, if it was to decide to scale down facilities there.
“It's conditional on determining with the Australian government what the future of the shipbuild industry is, it's not necessarily about orders, we need to take a long term view on what they want as capabilities,” King said.
Analysts at Morgan Stanley said that the absence of a new order for Typhoon would be of greater concern than any restructuring of BAE's shipbuilding business in Australia.
Saudi Arabia has grown more aggressive this year in countering Iran across the region and analysts said that the nuclear agreement struck between Iran and six world powers to release it from sanctions, could encourage Saudi to buy more jets.
Source: Reuters
