Aerospace and defence contractor BAE Systems yesterday warned its 2012 profits could be hit if it could not reach agreement with Saudi Arabia over a multi-billion-pound aircraft order.
The firm said underlying earnings per share could be reduced if a definitive price for the supply of 72 Typhoons to the Royal Saudi Air Force was not agreed in the next two months.
The company, which has recently seen a proposed mega-merger with Franco-German aircraft manufacturer EADS collapse, is due to report its annual results in February.
It yesterday advised investors that issues remained to be resolved with the Saudi government over a final contract price for its 2007 order.
This was placed under the Salam agreement between the governments of the Gulf state and the UK.
In a statement yesterday, the firm said: “Discussions continue towards a Salam agreement. Acceptable pricing terms remain the group’s driver to such an agreement, not the timing of the settlement.
“Should an acceptable agreement not be reached before the group’s full-year results announcement, the impact on 2012 trading guidance would be to reduce the group’s underlying earnings per share by approximately 3p per share.
“BAE Systems, as the prime contractor to the UK Government, has delivered 24 Typhoon aircraft to date.
“All parties remain committed to the programme, and further aircraft are in-build for deliveries to recommence in 2013. Further progress has been made on other aspects of the group’s business in the Kingdom of Saudi Arabia.
“Following the approval of budgets amounting to $12bn in December 2011, negotiation of contracts to provide the next five years of support, together with supply of other related equipment under the core Saudi British Defence Cooperation Programme (SBDCP), are well advanced and are expected to be signed before the end of 2012.”
Meanwhile, there was a warning yesterday that Scottish defence contractors would face a more uncertain future under independence.
Defence Equipment Minister Philip Dunne reiterated Government warnings about the Type 26 warship which is currently expected to be built on the Clyde insisting there was no intention to build such vessels outside the UK.
He also warned the Commons Scottish Affairs Committee the nation would lose out on “cutting edge” research contracts in the event of a split.
Mr Dunne said: “We have never placed an order for a warship, other than in times of world wars, outside the United Kingdom.
“It is not our intent to do so with the Type 26.”
Mr Dunne added: “In the event that the decision were to take place after the creation of an independent Scotland we would be in a very different environment to that which we are today and we would clearly have a strong view about that,” he added.
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