British defence and security firm BAE Systems Plc (BA.L, BAESY.PK) reported Thursday a decline in profit for its fiscal 2012 reflecting lower sales in most of its divisions. Looking ahead, the company sees modest growth in underlying earnings per share for 2013. Further, the company lifted its dividend, and initiated a three-year share repurchase program of up to 1 billion pounds.
In the year 2012, pre-tax profit dropped to 1.37 billion pounds from 1.47 billion pounds a year ago. Profit per share declined to 32.8 pence from last year's 36.7 pence.
Underlying earnings, which excluded certain items, from continuing operations fell 2 percent to 38.9 pence per share, excluding the UK tax agreement benefit.
Operating profit, however, grew to 1.64 billion pounds from 1.58 billion pounds last year, while underlying earnings before interest, taxes and amortization or EBITA, a key earnings metric, reduced 6 percent to 1.90 billion pounds.
Annual sales, including share of equity accounted investments, also declined 7 percent to 17.83 billion pounds from the prior year's 19.15 billion pounds, reflecting lower volumes in the Land & Armaments business, and there being no contracted Typhoon aircraft deliveries in the year under the Salam Typhoon program.
Platforms & Services' US and UK operations generated lower sales, while International sales grew reflecting increased support activity on the Salam Typhoon program and weapons deliveries.
According to the company, the US business has felt the dual pressure of reduced activity in support of deployed operations in Iraq and Afghanistan, and measures to reduce US federal budget deficits. In particular, the US land vehicles business has, as forecast, seen significant year-on-year reductions from the peak of activity in 2008.
The company's full-year order backlog increased 8 percent to 42.4 billion pounds, mainly on growth in non-US and UK order intake.
Further, the board has recommended a final dividend of 11.7 pence per share, making a total of 19.5 pence per share for the year, up by 4 percent over 2011.
Looking ahead, the company sees modest growth in underlying earnings per share for 2013, subject to near-term uncertainties relating to U.S. defence budgets. In addition, and assuming a satisfactory conclusion to Salam pricing negotiations this year, there would be a further increase of around 3 pence in underlying earnings per share, BAE Systems added.
The company further said that growth opportunities in some segments of the US and UK markets are identified, but the overall outlook in both countries is expected to continue to be constrained.
In wider international markets, the company sees good growth in order intake leading to anticipated growth in international sales.
Further, the company said that Larry Prior, executive vice president of the Service Sector businesses headquartered in the US and Chief Operating Officer for BAE Systems, Inc. and member of the Group's Executive Committee, will leave to pursue other opportunities, with effect from March 30.
In London, BAE Systems shares are currently trading at 345.84 pence, up 13.64 pence or 4.11 percent.
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