Britain’s BAE Systems yesterday said net income last year fell 44 percent due to a one time benefit the company received in 2006 related to the sale of its stake in jet plane maker Airbus, which is owned by the European Aeronautic Defence and Space Co.
Net income last year was $1.8 billion versus $3.2 billion in 2006. However, excluding the gain from the Airbus related sale, operating profits from continuing operations managed a nearly 10 percent gain to $2.3 billion driven by results at the company’s United States-based Land and Armaments Division and the Programmes and Support division. Free cash flow was $3.9 billion.
Sales for the year climbed 14 percent to $30.8 billion from $27 billion in 2006, driven mainly by gains at Land and Armaments and to a lesser extent at Programmes and Support. The results benefited from five months of sales related to the acquisition of Armor Holdings last summer, which contributed $1.4 billion in that period.
BAE’s U.S.-based businesses accounted for 47 percent of sales. Sales at Land and Armaments increased 68 percent to $6.9 billion, driven by strong organic growth combined with the Armor Holdings purchase. Operating profits at the division soared 86 percent on improved margin performance, higher sales and help from Armor Holdings.
BAE continues to like the organic growth prospects in 2008 at Land and Armaments, saying requirements in Iraq and Afghanistan will continue to help drive sales related to reset and upgrade work for military vehicles, and for medium caliber ammunition.
Sales at Programmes and Support increased 14 percent to $10.4 billion while operating profits jumped 33 percent to $894.4 million. Income was boosted in part by a one time gain related to arbitration on a patrol vessel program.
Sales declined at the Electronics, Intelligence and Support business to $7.7 billion due to foreign currency translation stemming from the weak dollar while operating profits were flat at $841.5 million. BAE said operating profits in the division also suffered due to accounting for the weak dollar.
Sales also declined at the International Business segment to $6.6 billion due to the sale in 2006 of the former Atlas Elektronik business. Excluding the Atlas results, sales would have eked out a 1 percent gain. Profits at the division grew 5 percent to $853.1 million on higher margins.