BAE to pump ?1bn into pensions black hole as FY profits rise
By Frank Prenesti
Date: Thursday 20 Feb 2020
(Sharecast News) - Weapons company BAE Systems reported full year earnings growth of 7%, in line with its own guidance, as it forecast a rise in earnings in 2021 by mid-single digit, excluding the impact of recent US acquisitions.
Earnings per share rose to 45.8p, up from 42.9p a year ago, the company said on Thursday, on a stronger operational performance. Underlying core earnings were up 5% to ?2.12bn as BAE expected a lift from its F35 fighter programme and Typhoon jet contract with Qatar.
Annual sales rose more than 10% to ?20.1bn and underlying earnings before interest, tax and amortisation increased 5% to ?2.1bn. Operating profit grew 18% to nearly ?1.9bn.
The company also said it planned to make a ?1bn one-off payment to its pension plan to help plug a ?1.9bn hole in the scheme after talks with the UK's Pensions Regulator in the UK. The contribution would be funded by debt and previous arrangements to pay ?240m into the scheme this fiscal year and ?250m next year, would continue.
Deficit contributions in the US would be $80m in 2020 and $40m a year after that, BAE added.
BAE said the impact of UK government plans to shut the door on non-English speaking, low skilled European Union workers after Brexit was likely to be "limited".
The company also said it was working with industry peers and the British government to fulfill contractual support arrangements with Saudi Arabia after Germany, a partner on projects including the Eurofighter, banned exports to kingdom over the killing of journalist Jamal Khashoggi by state agents.
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