BAE Systems forecasts flat 2018 as jet output slows
By Sarah Young
LONDON (Reuters) - BAE Systems forecast flat 2018 earnings on Thursday as it adjusts to lower production of Eurofighter Typhoon jets, sending shares in the British defence company lower.
The guidance reflects organisational changes and new accounting standard IFRS 15, said BAE, which is building Britain's new nuclear submarines and provides electronics for the F-35 combat jet.
Analysts had been expecting earnings to grow 2 percent in 2018, Reuters data showed.
BAE shares were down 2.3 percent at 587 pence at 1026 GMT.
The downgrade to previous expectations in part reflected currency headwinds, Investec analysts said.
Jefferies analyst Sandy Morris said CEO Charles Woodburn, who took over last July, may also be taking a new approach.
"BAE has tended to err on the side of optimism. Maybe the new management is less inclined to do so," he said.
Analysts at Agency Partners also said that there was possibly "a bit of conservatism in overall guidance".
The company said sales of the Eurofighter Typhoon jet would fall this year as it finishes filling older orders.
It said its Applied Intelligence division, which provides governments with defences against cybercrime, would only break even after a restructuring.
Woodburn has made a number of organisational changes since taking the helm, including cutting 2,000 jobs to reflect lower Typhoon production.
Since announcing the cuts, however, BAE has struck a deal with Qatar to sell 24 Typhoons, and Woodburn said more sales could follow.
"The opportunity book for Typhoon is as good as I've seen it in the last two years and probably as good as it's been in quite some time," he told reporters on a call.
BAE aims to win orders from Belgium and Malaysia as well as existing customer Saudi Arabia.
None of those potential deals were counted in BAE's guidance, Woodburn noted.
BAE said its 2017 underlying earnings per share rose 8 percent to 43.5 pence, meeting forecasts, helped by growing demand for its advanced precision kill weapon rockets as well as a rise in orders for the U.S.-built F-35 jet.
(Reporting by Sarah Young; editing by Paul Sandle and Jason Neely)
