Sales fall at BAE

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DEFENCE giant BAE Systems reported a 14 per cent fall in sales as military spending in the US and UK is cut.

The group, which is reported to be considering a move to close its Portsmouth dockyard, threatening up to 3,000 job losses, said sales fell more than expected to £19.2bn in 2011. Underlying profits dropped seven per cent to £2bn.

The defence and security giant, which produces Astute nuclear-powered submarines and is the largest supplier of land vehicles to the US army, said its order book also declined by eight per cent to £36.2bn and warned that little sales growth can be expected in 2012.

The group said defence spending has reduced in its largest markets - the UK and the US - while it was also hit by a delay in an order for Eurofighters to Saudi Arabia.

BAE is also likely to see its Eurofighter consortium fail to land a large contract to supply fighter jets to India after a French rival was named preferred bidder.

It last year signalled the end of production at its factory in Brough, Yorkshire, as part of a round of 3,000 redundancies at sites across the UK as it adjusts to the difficult climate.

Chief executive Ian King said no decision had yet been made on the review of its warships operations, but he added that nothing could be ruled out, including the closure of Portsmouth, which employs 1,500 staff and a similar number of support roles.

He stressed that the review covers its entire warships business, not just its Portsmouth yard.