BA. Bae Systems Plc

   By Adria Calatayud 
 

British arms maker BAE Systems PLC (BA.LN) reported first-half earnings Wednesday. Here's what you need to know:

PROFIT: BAE's pretax profit fell 22% to 571 million pounds ($749.9 million) for the first six months of 2018 compared with GBP734 million the year before. That is below analyst forecasts of GBP744 million, according to a consensus based on three analysts' estimates provided by FactSet. The closely watched underlying earnings before interest, taxes and amortization fell 9.6% to GBP874 million.

REVENUE: The company's first-half revenue came in at GBP8.16 billion, falling short of analysts expectations of GBP8.64 billion. This represents a 8.5% on-year decline. BAE's first-half activity was expected to decline after the end of significant contracts.

WHAT WE WATCHED

ORDERS: Order intake for the first half was GBP9.70 billion, taking the company's order backlog to GBP39.7 billion compared with GBP38.7 billion a year earlier, BAE said.

Analysts said the main investor focus would be on BAE's order backlog given that the company regards this year as one of transition in which it guides for underlying earnings per share to be in line with 2017. Jefferies analyst Sandy Morris said BAE is set to make "pedestrian progress" until 2020, when its outlook will start to improve.

CHARGES: BAE booked a number of exceptional charges in the first half, as a result of "disappointments" on long-standing programs at its maritime and U.S. platforms and services divisions, it said. The company took a GBP15 million charge on the building of the first of five offshore patrol vessels for the U.K. after sea trials discovered flaws that needed fixing. It took a further $45 million charge on earnings from a decision to close a shipyard in Mobile, Alabama.

Write to Adria Calatayud at adria.calatayudvaello@dowjones.com

(END) Dow Jones Newswires

August 01, 2018 09:24 ET (13:24 GMT)

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