Increased profit, dividend and order book for British Aerospace in 1998
;British Aerospace today announced its 1998 results which reflected a good performance and a record order book of £28.1bn. ;The Company generated overseas sales of £7.7bn in 1998 representing 89% of sales and continued a consistent track record as the UK's leading export performer. ;Profit before exceptionals and goodwill amortisation rose to £708m ;Profit before tax increased to £ 973m ;Basic earnings per share* increased to 29.4p ;Dividend per share is up 33% to 6.50p ;Net cash balance at year end increased to £196m ;Order book at record high of £28.1bn
;*Excluding exceptional items and goodwill amortisation
;All figures include the Group's share from joint ventures. Comparative figures have been restated following the adoption of new Financial Reporting Standards
;British Aerospace had another good year's trading with a 17% increase in profit before exceptional items and goodwill amortisation to £708m. Earnings per share on a comparable basis increased 18% to 29.4p. The Company continues to make good progress in the market and finished the year with an order book at yet another record high of £28.1bn. ;Commenting on these results John Weston, Chief Executive said: 'the business continues to make good progress in delivering performance against our planning base and despite growing competition in our markets we have further built on our order book. This strength of order book will be an excellent foundation from which to deliver performance over the coming years'. ;He added: 'we are making progress in our wider objectives to participate fully in a more integrated international industry with consolidation within Europe a key element in our strategy. The proposed merger with Marconi Electronic Systems is an important step in that consolidation and creates a strong and highly capable business with significant cost benefits. Importantly we see the move as consistent with other possible consolidation opportunities'. ;British Aerospace continues to pursue its strategy of focus on aerospace and defence with emphasis on capabilities in prime contracting and system integration. ;During 1998 significant progress has been made to build on this strategy with the acquisition of the former Siemens Plessey businesses in the UK and Australia, and in acquiring full control of the previous joint venture BAeSEMA. With the earlier acquisition of 49% of the German naval and land systems business STN Atlas, these now form the core of the new Defence Systems business unit. ;In addition, we have acquired a 35% interest in Saab AB, the Swedish aerospace and defence company. Disposals in the year covered a partial sale of the Company's holding in Orange plc, our interest in Orion Network Services Inc, and the Arlington Securities business. ;Consolidation of the aerospace and defence industry is a key element of the Company's strategy to strengthen the competitive position of the industry in Europe in preparation for the anticipated further globalisation of the market which would result from a closer relationship between the industrial base in Europe and that in the United States. Discussions have progressed with others, at both industry level and with Government encouragement across Europe with a view to integrating the aerospace and defence industry. ;The proposal to merge the defence interests of GEC with British Aerospace is consistent with this strategy and approach. The merger presents a unified UK position with respect to the anticipated further consolidation in Europe and ultimately the USA.
Defence ;A strong order intake during the year of £10.0bn resulted in a defence order book of £16.1bn at the year end. Sales in military aircraft in 1999 and 2000 will be sustained around current levels with the completion of last deliveries of Tornado aircraft being offset by the inclusion of Saab and higher activity in other programmes. Growth will return thereafter as both Nimrod and Eurofighter Typhoon deliveries commence. Export orders for Eurofighter Typhoon and Gripen would further enhance the rate of growth. ;A number of key milestones were achieved in the Eurofighter Typhoon programme, notably the signing of the production framework agreement which committed the partners to a combined off-take of 620 aircraft. ;With the completion of the current programme of aircraft deliveries to the Royal Saudi Air Force, as planned the Company has commenced a refocusing of the AI Yamamah programme onto the core support services activities. ;The Hawk continues to attract substantial market interest. Contracts were signed for the Hawk 100 to equip a new NATO Flight Training establishment in Canada. The Hawk and the Saab Gripen aircraft were the preferred choice in a package of defence equipment selected by South Africa. Our Defence Systems business unit generated sales totalling £1.3bn for the year. ;Sales growth is anticipated through programmes such as Bowman and in Battlefield Digitisation. The Matra BAe Dynamics guided weapons joint venture saw significant orders won during 1998, with a gross order intake of £1.6bn, primarily driven by export contracts, while the Royal Ordnance business continues to operate in a difficult trading environment.
Commercial Aerospace ;The commercial aerospace activities produced sales of £2.5bn through a combination of higher Airbus activity and lower activity in regional aircraft. The commercial aerospace order book stood at 12.0bn at the year end. ;Airbus has had an exceptional sales year in a strong market for large commercial jets. Airlines placed net orders for 529 new airliners valued at $37bn. This performance builds on 1997's previous record order intake of 438 aircraft. Net of cancellations, the order book for Airbus airliners stood at 1,309 aircraft, valued at $92.7bn, at the end of 1998. ;To meet demand the Airbus partners are further increasing production rates. In 1998 Airbus Industrie delivered 229 aircraft. Airbus anticipates delivering 291 aircraft this year. ;With the higher production rates repayments under UK Government Launch Aid arrangements have increased to £122m. Total repayments for 1999 will be some £179m, of which approximately £74m will be on the single-aisle programmes. A330/340 repayments will now continue for some years but single-aisle repayments will be substantially completed in 1999. British Aerospace's Airbus financial performance is expected to improve significantly in 2000 as a result. ;The Avro regional jet business continued to achieve a breakeven performance with 20 aircraft delivered during the year. ;The lease market for the portfolio of aircraft under management has continued to be good with the leased fleet of BAe 146 aircraft remaining fully committed and with a good quality customer base and security of income. However the turboprop market remains difficult. ;During the year the Company entered into a Financial Risk Insurance Programme (FRIP) which reduced its exposure from commercial aircraft financing by obtaining insurance cover from a syndicate of leading insurance companies to cover any significant shortfalls of income from the aircraft portfolio.
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Increased profit, dividend and order book for British Aerospace in 1998
