BAE Systems hinted at the possibility of more job cuts yesterday as Britain's biggest defence manufacturer announced disappointing results for 2011 with sales expected to remain stagnant this year.
Posting a 7-per cent drop in full-year profit to £2.02 billion, as the US army's Iraq withdrawal led to a 14 per cent drop in sales, BAE's chief executive, Ian King, said "affordability has become the priority for our customers".
According to Endre Lunde, at the defence analysts IHS Janes, it was a market where large contracts were few and far between. He added, not just in the US and the UK but in the wider industrial world, just about all countries were cutting or flatlining on defence. He said BAE was doing what it could, but they did not have that much space to manoeuvre in a market that tight.
BAE is targeting more international business, in countries such as India, Australia and Saudi Arabia, as also offering more support services, such as upgrading armoured personnel carriers. The group is also keen on the expansion of its fast-growing, "cyber-security" business, which includes data storage and fraud detection services.
BAE's gloomy outlook pushed its shares down by 2 per cent, to 325.2p, which saw the company, which is involved in the production of F-35 and Typhoon fighter jets and the Astute class submarine, among the FTSE 100's biggest losers.
BAE announced 3,000 UK job losses in September and was expected to cut 1,500 more positions when a review of its shipbuilding operation was completed which would likely result in the closure of its Portsmouth dockyard. (See: UK's BAE Systems to slash 3,000 jobs)