BAE Taking Steps to Mitigate Effect of Germany Restricting Arms Export to Saudis
February 21 2019 - 5:22AM
Dow Jones News
By Robert Wall
U.K. weapons maker BAE Systems PLC (BA.LN) is taking steps to
shield its sales from being hit by Germany's restrictions on arms
exports to Saudi Arabia, Chief Executive Charles Woodburn said
Thursday.
Germany blocked some arms exports to Saudi Arabia following the
killing of journalist Jamal Khashoggi last year.
The restrictions could impact BAE Systems' ability to repair
Saudi Arabia's fleet of Eurofighter Typhoon combat jets. The
twin-engine combat plane used in Saudi Arabia's military operations
in Yemen is made by a joint venture involving BAE, the German and
Spanish arms of Airbus SE (AIR.FR), and Italy's Leonardo SpA
(LDO.MI), giving the German government some say over parts
sales.
The "current German government position on export licensing may
affect the group's ability to provide capability to Saudi Arabia
which may have a consequential impact on the Group's financial
performance and relationships," BAE said in a statement.
Mr. Woodburn said the company is "working on a number of
mitigation" plans, including unspecified supply-chain actions. The
situation is not a "cliff-edge" scenario, he said, and impacts so
far are minimal. Still, he warned that over time the situation
"could become more difficult."
BAE said it is also working with the U.K. government to resolve
the issue.
The company in March last year finalized an agreement to sell
Saudi Arabia another batch of 48 Typhoons and Mr. Woodburn said
Thursday that contract talks to complete the transaction
continue.
Earlier in the day BAE reported a 14% rise in 2018 pretax
profit, and said it expects underlying earnings per share for 2019
to grow by a mid-single-digit percentage.
Shares in the weapons maker fell 3.3% after the 2018 earnings
and were last down 5.8% at 475 pence.
Write to Robert Wall at robert.wall@wsj.com
(END) Dow Jones Newswires
February 21, 2019 05:07 ET (10:07 GMT)
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