BAE Systems' profits plunge

Feb 18 2010 By nebusiness

Defence giant BAE Systems today said profits had been torpedoed by the loss of a key US contract and hefty fines to settle bribery allegations.

The loss of a major deal to build trucks for the US Army - confirmed earlier this week - meant a £973m write-off at its Armor Holdings business bought in 2007.

The firm is also paying £278m and pleading guilty to two charges after a probe of its activities in several countries by the US Department of Justice and the Serious Fraud Office.

Although BAE enjoyed a one-off pension gain in the US, operating profits for 2009 slumped to £982m from £1.72bn the previous year.

The firm expects further growth this year but it is also steeling itself for belt-tightening measures as governments attempt to tackle soaring deficits.

"Defence budgets in both the UK and the US are expected to come under further pressure, and with expectations of a more challenging business environment ahead, the focus on driving performance and efficiency in the business will be key," the company said.