UK defence cuts hit BAE profits

Profits at global defence giant BAE Systems were down last year as the company behind the Clyde naval shipbuilding operation warned deficit cutting measures in the UK and US were hurting its outlook.

The defence systems manufacturer, which employs a 3,000 strong staff at its two Clydeside yards, expects the UK defence budgets to remain flat as it announced underlying earnings before interest, taxation and amortisation at £1.9 billion, as against £2.02 billion in 2011.

However, BAE Systems' shares surged 4 per cent to 345.9p. Pre-tax profits was down to £1.4 billion from £1.5 billion and sales declined byh 7 per cent to £17.8 billion from £19.2 billion in a year that saw BAE fail to close a merger deal with European defence firm and Airbus owner EADS.

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