(NSI News Source Info) February 20, 2009: BAE Systems, Europe's largest defence contractor, is gearing up to supply the
United States with new armoured vehicles for President Obama's troop surge in Afghanistan.
The company is competing to supply 2,000 all-terrain vehicles for the US Army, which will be deployed in Afghanistan as part of expanded operations there.
President Obama said this week that he would send an additional 17,000 troops to Afghanistan from the spring as part of efforts to combat the resurgent Taleban.
The US Department of Defence is seeking a lighter version of the Mine Resistent Ambush Protected (MRAP) carriers it has ordered to protect troops in Iraq.
The MRAP vehicles are designed to limit the damage to troops from roadside bombs and improvised explosive devices (IEDs). These bombs became the major cause of death of troops in Iraq after the 2003 invasion.
The US has bought 12,000 MRAPs and BAE, the largest supplier of armoured vehicles in the world, won nearly 60 per cent of the orders.
Last year it delivered 4,700 MRAPs, which was a significant contributor to a 31 per cent increase in BAE's profits.
The company said yesterday that revenue in 2008 had increased by 18 per cent to £18.5 billion and underlying profits were nearly one third higher at £1.9 billion.
BAE's Land Systems division, which builds armoured vehicles in the US, the UK, Sweden and South Africa, increased sales by 38 per cent to £6.4billion.
Ian King, the chief executive of BAE, said: “Land Systems was driven by MRAP last year. We always knew that MRAP would be a one-off gain but there is also good organic growth in that division.”
BAE will announce next week the vehicles that will compete for the next phase of MRAP purchasing. It is likely to offer lightweight variants of the RG-33 and Caiman vehicles.
The Pentagon's latest MRAP order is for all-terrain vehicles (ATVs) that will be smaller and more manoeuvrable than the troop carriers built for Iraq.
The M-ATV, as the new version is being called, will weigh up to 10tonnes compared with up to 24tonnes for existing MRAPs.
President Obama's determination to combat the Taleban has alleviated fears in the defence sector that he would immediately cut the military's budget.
BAE received nearly 60 per cent of its sales from the Pentagon last year and expects continued strong demand this year.
Mr King said that BAE would not be immune to the impact of a global economic downturn but investors believe that the company is better placed than most to weather a difficult 2009.
BAE's share price has gained more than 20 per cent in the past three months while the FTSE 100 has experienced a small decline. The share price was up 13p to 400p yesterday.
Mr King said: “We don't think we're recession-proof. We do have some insulation because of the length of the order book and the visibility we have, but we are very vigilant on what's going to happen when we look forward and look at what governments have done to fund the financial bailouts.”
BAE's order book grew by 20 per cent last year to £46.5 billion. The company's strong results enabled it to increase its dividend by 13 per cent to 14.5p a share.
Howard Wheeldon, senior strategist at BGC Partners, the brokerage firm, said: “In difficult global economic times such as these it is heartening to see a UK-based company that is both diverse and international producing not only sustainable growth in shareholder value but also rewarding shareholders with a decent dividend increase. At least there are no balance sheet concerns here.”
BAE had to write down the value of its assets by £177 million last year, primarily because of the falling value of its 35 per cent holding in Saab, the Swedish aerospace company that makes the Gripen fighter jet.
United States with new armoured vehicles for President Obama's troop surge in Afghanistan.
The company is competing to supply 2,000 all-terrain vehicles for the US Army, which will be deployed in Afghanistan as part of expanded operations there.
President Obama said this week that he would send an additional 17,000 troops to Afghanistan from the spring as part of efforts to combat the resurgent Taleban.
The US Department of Defence is seeking a lighter version of the Mine Resistent Ambush Protected (MRAP) carriers it has ordered to protect troops in Iraq.
The MRAP vehicles are designed to limit the damage to troops from roadside bombs and improvised explosive devices (IEDs). These bombs became the major cause of death of troops in Iraq after the 2003 invasion.
The US has bought 12,000 MRAPs and BAE, the largest supplier of armoured vehicles in the world, won nearly 60 per cent of the orders.
Last year it delivered 4,700 MRAPs, which was a significant contributor to a 31 per cent increase in BAE's profits.
The company said yesterday that revenue in 2008 had increased by 18 per cent to £18.5 billion and underlying profits were nearly one third higher at £1.9 billion.
BAE's Land Systems division, which builds armoured vehicles in the US, the UK, Sweden and South Africa, increased sales by 38 per cent to £6.4billion.
Ian King, the chief executive of BAE, said: “Land Systems was driven by MRAP last year. We always knew that MRAP would be a one-off gain but there is also good organic growth in that division.”
BAE will announce next week the vehicles that will compete for the next phase of MRAP purchasing. It is likely to offer lightweight variants of the RG-33 and Caiman vehicles.
The Pentagon's latest MRAP order is for all-terrain vehicles (ATVs) that will be smaller and more manoeuvrable than the troop carriers built for Iraq.
The M-ATV, as the new version is being called, will weigh up to 10tonnes compared with up to 24tonnes for existing MRAPs.
President Obama's determination to combat the Taleban has alleviated fears in the defence sector that he would immediately cut the military's budget.
BAE received nearly 60 per cent of its sales from the Pentagon last year and expects continued strong demand this year.
Mr King said that BAE would not be immune to the impact of a global economic downturn but investors believe that the company is better placed than most to weather a difficult 2009.
BAE's share price has gained more than 20 per cent in the past three months while the FTSE 100 has experienced a small decline. The share price was up 13p to 400p yesterday.
Mr King said: “We don't think we're recession-proof. We do have some insulation because of the length of the order book and the visibility we have, but we are very vigilant on what's going to happen when we look forward and look at what governments have done to fund the financial bailouts.”
BAE's order book grew by 20 per cent last year to £46.5 billion. The company's strong results enabled it to increase its dividend by 13 per cent to 14.5p a share.
Howard Wheeldon, senior strategist at BGC Partners, the brokerage firm, said: “In difficult global economic times such as these it is heartening to see a UK-based company that is both diverse and international producing not only sustainable growth in shareholder value but also rewarding shareholders with a decent dividend increase. At least there are no balance sheet concerns here.”
BAE had to write down the value of its assets by £177 million last year, primarily because of the falling value of its 35 per cent holding in Saab, the Swedish aerospace company that makes the Gripen fighter jet. 
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