BAE keeps profit outlook

LONDON - Agence France—Presse

This file photo shows an Airbus A330 assembly line in Colomiers, France. The BAE-EADS mega merger has collapsed. AFP photo

British arms maker BAE Systems yesterday maintained its profit outlook for the year, a day after announcing the collapse of a proposed mega-merger with European aerospace giant EADS.

“As indicated previously, modest growth in underlying earnings per share is anticipated for 2012,” BAE said in a trading update.

The group added that trading during its third quarter “has been consistent with management expectations at the time of the half-year results announcement” in August.

BAE has been forced to soldier on under the guidance of an embattled chief executive after ending tie-up talks with EADS on Oct. 10 owing to a lack of accord with “various” government stakeholders.
BAE’s immediate future led by CEO Ian King is one of a company thrust back into an environment of falling defense spending by governments.

“Uncertainty as to how U.S. federal deficit reduction will be implemented... continues to cloud the outlook for the US government defense budget,” BAE said in Thursday’s earnings statement.
Meanwhile, the proposed merger to create the biggest aerospace and defense group was brought down by unexpectedly strong opposition from Germany.

Germany torpedoes deal

Observers said Germany torpedoed the deal because the power behind the civilian arm of the new group would shift completely to Toulouse in southern France.

Berlin was also said to reject that the group’s military operations would be run from London where BAE Systems is based leaving Germany empty-handed.