BAE Systems, the defence technolgy giant that is increasingly focussing on It services and security, saw a 10 percent drop in its shares today after it announced a fall in profits, which fell by two-thirds to £442 million in 2013. However, it also told investors that its UK business is in good shape and stable.
The group has won some high value deals in the UK over the past year, despite tight government budgets, it said. According to BAE, the poor results are the result of challenging market conditions and cuts to the US defence budget.
“Notwithstanding the continued pressure on many areas of government spend in the UK, our business is in good shape and the outlook remains stable,” BAE said in its earnings statement.
“Much of the Group's UK business is concentrated on a small number of large programmes where multi-year contracts provide good visibility, as evidenced by the large UK order backlog.”
For example, BAE recently signed a framework contract with the Foreign & Commonwealth Office (FCO) to deliver service management integration services across the FCO's global IT estate, worth around £40m over a five-year period. The group also signed a framework agreement with Network Rail to provide IT solutions and systems integration over a four-year period.
BAE also told investors that its Applied Intelligence business (formerly BAE Systems Detica) is “well-positioned in the fast-growing commercial cyber security sector” and has “substantially increased its order backlog”.
Earlier this month BAE Systems announced that it intends to recruit 120 IT graduates to bolster its cyber security arm.