BAE Systems (LSE: BA.) issued its Interim Management Statement for the third quarter, stating that trading has been consistent with management's expectations. BAE continues to anticipate a year of ‘good growth’ for 2009 as a whole despite a lower volume of land vehicle sales than in 2008.
BAE’s Electronics, Intelligence & Support (EI&S) division continues to see good demand for its high technology capabilities. Last month BAE Systems was one of two companies selected to participate in an indefinite-delivery/indefinite-quantity contract with a maximum value of US$1.9bn.
However, the company’s The Land & Armaments division experienced a set back at the end of August when it was notified by the US Department of Defense that it had lost a build-to-print competition, for follow on production of vehicles under the Family of Medium Tactical Vehicles programme. Production of FMTV vehicles continues through to the fourth quarter of 2010 under BAE Systems' existing contracts.
In August BAE won a £370m, ten-year contract to support Spearfish and Sting Ray torpedoes in service. Similarly the Group was awarded its first major UK naval support contract with the Type 45 anti-air warfare destroyer In-Service Support contract valued at £309m over seven years.
In September, BAE Systems and VT Group plc (VT) signed an agreement under which VT exercised its option to sell its 45% shareholding in BVT Surface Fleet Limited (BVT) to BAE Systems. The consideration for the sale of approximately £346m is to be satisfied in cash. Subsequently BAE Systems will own 100% of BVT.
Also in September, following a detailed review of current and projected business levels, BAE Systems announced the start of consultation regarding the potential closure of its Woodford site in the UK at the end of 2012.
In its international operations BAE has agreed a number of support contracts with The Royal Saudi Air Force (RSAF) following the delivery of the first four of 72 Typhoon aircraft. The arrangements will be operated through a ‘full availability’ service contract with BAE Systems. The contract also includes training in the United Kingdom for RSAF Typhoon pilots and Typhoon multi-skilled aircraft technicians.
BAE also noted the ongoing investigation underway at the Serious Fraud Office related to previous contracts secured by the group. BAE said it was continuing “to expend considerable effort” seeking to resolve, at the earliest opportunity, the historical matters under investigation by the SFO.