14 Feb 2002
BAE Systems today announced preliminary results that reflect the success of its strategies. BAE Systems delivered to the plans it announced, and finished 2001 with a strong order book and balance sheet.
- Profit before interest* of 1,260 million an increase of 32.6% over last year
- Order book 43.8 billion, up 6.8% from last year
- Earnings per share 23.4p
- Dividend per share 9.0p
* excluding exceptional items and goodwill amortisation
2001 was a year that brought significant changes to the company. Among these were the completion of the transformation of the merger to a unified company, the integration of the North American businesses acquired in 2000, and good progress in securing important new business. Most notable in new business secured were the Joint Strike Fighter, the Type 45 Destroyer, and the Airbus A380 order book.
2001 was a year of changes in the marketplace, most notably in the aftermath of the terrorist attacks on 11 September 2001 in the United States.
The profit of 1,260 million was achieved on sales of 13,138 million. The order book at the end of the year was up 6.8% from the previous year's end. Net debt was reduced by 7.6% to 831 million.
Sir Richard Evans, chairman, said "2001 has been a transitional year in the company's development. Despite difficult markets, we have delivered on our plans and we have reshaped our commercial aerospace activities to remove risk and focus on the future growth we see in the commercial jet market. We have also brought about a fundamental shift in our defence business to reflect the growing emphasis on systems and the importance of the U.S. market.""
John Weston, chief executive, added "Since the early nineties, we have been pursuing a strategy to transform the company into a world-wide business with systems engineering at its heart. The progress in 2001 has secured that transformation. Our strategy of targeting growth in defence systems and customer support is working to good effect."
BAE Systems has changed fundamentally in the last three years. Following the merger, significant acquisitions in North America, and the formation of the integrated joint Airbus company, Airbus SAS, the company is well positioned to address current and future markets, as a more broadly based company with a better spread of business risk.
In 2001, BAE Systems, as part of the Lockheed Martin team with Northrop Grumman, won the U.S. Department of Defense competition for the Joint Strike Fighter (JSF) programme, with a combined U.S. and UK requirement for more than 3,000 aircraft, not including exports. This programme is estimated to be worth more than 14,000 million to BAE Systems before export orders, providing substantial workload and value over many years.
The North American businesses acquired in 2000 have been fully integrated into the company and have made a major contribution to the company's position in airborne electronic systems. Their trading performance is already ahead of initial expectations.
It was with regret that the company announced in November 2001 the closure of the RJ and RJX regional jet programme, and the related re-structuring of our other commercial aerospace activities to bring them into line with their downturned market.
2001 was important to the company's European relationships, with the restructuring of Airbus, MBDA and AMS which strengthened those businesses.
Airbus demonstrated its capability to deliver a strong operating performance in 2001 after investment of 1.8bn Euros in future programmes. The current market difficulties are a near term concern, and some recovery is already apparent. Medium term outlook is excellent. The order book for the Airbus A380 continues to grow, finishing the year at 85 firm orders.
Significant progress has been made on the Eurofighter Typhoon and Nimrod programmes as the Eurofighter entered production and the Nimrod programme stabilised in line with plan.
Two factors previously identified will adversely impact performance in 2002: the completion of export construction contracts will lead to a reduction in activity in the Programmes business group, and the downturn in the commercial aircraft market will result in a much reduced contribution from Airbus. These reductions will be partly mitigated by the overall improvement in performance in the other business groups.
In 2003, an improved performance from defence activities and a maintained position at Airbus can be expected to result in a resumption of growth. Looking further ahead, the existing order book will deliver good growth in defence activity while prospects for Airbus remain excellent over the medium term.
