BAE profit sinks after ship-building problems

British weapons maker BAE Systems PLC (BA.LN) said Wednesday that first-half earnings were hurt by problems on some ship building and other programs, though the company stuck to its full-year guidance.

Some cost savings which the company had hoped to deliver on the U.K.’s second new aircraft carrier have been hard to garner, BAE Systems Chief Executive Charles Woodburn told reporters. The company remained committed to delivering the program on schedule, he said.

BAE backed its full-year guidance, in part on the strength of its defense-electronics and air businesses.

Pretax profit for the six months to the end of June was 571 million pounds ($749.9 million) compared with GBP734 million the year before, BAE said. First-half net profit fell 17% to GBP471 million, the company said.

BAE’s underlying earnings before interest, taxes and amortization–a more closely watched profit measure–was GBP874 million, down 9.6% on year.

First-half revenue decreased 8.5% to GBP8.16 billion from GBP8.92 billion a year earlier, BAE said. Analysts had forecast the company’s first-half revenue at GBP8.64 billion.

BAE said it took a GBP15 million charge on the building of the first of five offshore patrol vessels for the U.K. after sea trials discovered flaws that needed fixing. Half-year operating margin for the maritime unit fell to 6.4% from 7.4%.

BAE said it took a further $45 million charge on earnings from a decision to close a shipyard in Mobile, Alabama.

The company said it was in a contract dispute over construction of a facility in the U.S., though it wouldn’t detail the scale of the cost.

BAE shares were trading 0.58% lower early in London.

The board raised its declared a dividend of 9.0 pence a share, up from 8.8 pence a share a year earlier.

Order intake for the first half was GBP9.70 billion, taking the company’s order backlog to GBP39.7 billion compared with GBP38.7 billion a year earlier, BAE said.

BAE confirmed its previous full-year guidance and said earnings in 2018 should be largely stable on year at around 42.1 pence a share, reflecting accounting changes.

There could be some small additional benefit of around half a penny from exchange translation, the Chief Financial Officer Peter Lynas said.

Source: Read Full Article