BAE Systems 2005 Interim Report: Profits Jump 35%

In the wake of its $4 billion acquisition of American armored vehicle and defense manufacturer United Defense LP, BAE Systems has reported a 35% rise in pre-tax profit during the first six months of the year (to GBP 426 million, or $726 million), and a rise in net profit of over 300% (GBP 318 million from 69 million). Much of the coverage appears to revolve around net numbers, or Chairman Dick Olver’s denial that BAE has any plans to sell its 20% stake in Airbus. DID looked at the 2005 interim results in detail, and saw why not. While BAE Systems is best known for its involvement in big-ticket items like the M2/M3 Bradley, Eurofighter, Britain’s CVF future aircraft carrier, et. al., that is not where the firm’s profits come from in this interim report. Indeed, the sectors that manage these big-ticket items are relatively weak performers at the moment. On measures of EBITDA and Operating Business Cash Flow (OBCF), the big contributors among BAE’s divisions are very clear over the past six months. Number one is Customer Solutions & Support, whose primary activities involve long term partnerships with the UK MoD’s Defence Logistics Organisation, together with the company’s extensive […]