BAE bearing brunt of spending cuts

The group saw a small rise in underlying earnings to £2.2bn last year but offered a cautious tone on prospects, particularly as it continues to grapple with the implications of October’s UK defence spending review.

With government customers looking for cost savings, BAE has cut more than 15,000 jobs over the last two years in order to boost competitiveness.

In the United States, BAE said the defence and security markets continue to generate a number of opportunities despite budgetary pressures. And in India, where BAE is working to boost its presence, defence spending is expected to grow substantially, according to the company.

Overall sales rose 2 per cent to £22.4bn last year, while earnings were up due to growth in its division providing electronic systems for the US military.

However, its land and armaments division saw sales fall by 12 per cent to £5.9bn.