BAE Systems profits shoot up 22 per cent

BAE Systems, Britain's biggest weapons maker, today posted a 22 per cent jump in profits and flagged another strong year ahead.

The company revealed an underlying profit of £1.48 billion, which was slightly better than expected and which was helped by five months' contribution from recent US acquisition Armor Holdings, a key maker of military vehicles and body armour.

But BAE noted that business had been strong across all its operations and that overall sales grew by 14 per cent to £15.71 billion.

"We have excellent forward visibility and a further year of good growth is anticipated in 2008, including a full year contribution from the former Armor Holdings business," chief executive Mike Turner said.

It added that its order book at the end of December stood at £38.6bn, up 22 per cent year-on-year.

The defence contractor is involved in a host of projects involving the UK and US military, including the F-35 Joint Strike Fighter, Type 45 destroyers, Astute submarines, and mine-resistant ambush-protected (MRAP) vehicles for use in Iraq.

Other recent deals include a £4bn-plus order from Saudi Arabia to supply 72 Eurofighter warplanes and a £400 million contract to rebuild Bradley fighting vehicles returning from Iraq.

BAE has successfully targeted the higher growth sectors of the US defence market, while the scale of recent military operations, including in Iraq and Afghanistan, has boosted its land systems operation. As well as the £2.3bn purchase of Armor, the group also snapped up military support services firm MTC Technologies in a £225.9m deal in December.

Meanwhile, BAE continues to be dogged by corruption allegations and is under investigation by the US Department of Justice over arms deal payments with Saudi Arabia. And the Serious Fraud Office's decision last year to drop its investigation into alleged bribery and corruption involving arms deals between BAE and Saudi Arabia was challenged in the High Court last week. BAE has denied any wrongdoing.