* H1 EBITA down 6 pct at 865 mln stg vs f'cast 885.67 mln
* Ups interim dividend 3 percent to 8 pence/share
* Says will submit bid for UAE 60-jet deal soon
* Shares up 2.8 percent, highest in nearly 5 years
(Add details on exports, analyst comment, writes through)
By Brenda Goh
LONDON, Aug 1 BAE Systems Plc said it
expects a long-awaited multi-billion dollar Saudi fighter deal
to complete in the second half of this year, enabling it to
forecast a more than 10 percent lift to yearly underlying
Shares in BAE, whose $45 billion attempt to merge with
Franco-German EADS collapsed last year after government
opposition, were up 2.8 percent at 458.2 pence by 0919 GMT,
their highest in nearly five years.
BAE has been locked in pricing negotiations with Saudi
Arabia over the purchase of 72 Eurofighter Typhoon jets,
previously said to be worth some 4.5 billion pounds ($6.8
billion), since the so-called Salam deal was first signed in
BAE builds the Eurofighter alongside EADS, which is changing
its name to Airbus, and Italian arms maker Finmeccanica
. It said a year ago it expected the deal to close in
the following six months and has now repeated its optimistic
"In terms of Salam, we do expect that we will close this out
in the second half," Chief Executive Ian King told reporters.
"There is ... quite increasing appetite to talk about the
next batch of aircraft," King added, noting the two sides needed
to finalise the pricing of the first batch before moving on to
discussing any subsequent order. He said the Saudi airforce
could order a further 48 to 72 planes.
BAE is also chasing a 60-aircraft order from the United Arab
Emirates, which King described as potentially a "major game
changer" for the company. He said BAE would be submitting its
bid very soon.
A BAE executive had told Reuters in June the company was
hopeful of a UAE decision this year.
King said that if the company clinched the additional Saudi
and UAE orders, its Typhoon production line - at Warton in
northwest England - could stretch out by four years to 2022 at a
rate of 30 planes a year.
Malaysia, Korea and Qatar were also potential customers, he
International sales to countries such as Saudi Arabia have
become increasingly important to BAE, which has made exports and
niche markets such as cyber security its priority as defence
budgets shrink in the United States and Europe. Non-U.S. and UK
orders totaled 4.8 billion pounds over the six months.
BAE has continued to develop its Saudi business as talks
over Salam went on and in June signed a 1.8 billion pound
contract for follow-on support for the Salam programme.
Some analysts said the Salam deal looked as good as sealed.
"Consider it done," analysts at brokerage Jefferies said.
"We see much in the first-half 2013 result that should lend
credibility and solidity to earnings in full-year 2013 and ...
Yet Edison Investment Research analyst Roger Johnson said
the delays showed it was a buyer's market, cautioning this was
"a fact that will not go unnoticed by those with money to
Britain's largest defence contractor, which previously said
it had only expected "modest growth" in earnings, has repeatedly
said its profits and sales have been weighed down by the deal's
The company said the slightly revised outlook also took into
account a 1 billion pound share repurchase programme it had
launched in February, along with the impact of U.S. budget cuts.
BAE said earnings before interest, taxes and amortization
(EBITA) fell 6 percent over the first half of the year to 865
million pounds, on a 1 percent rise in sales to 8.45 billion.
Its underlying earnings per share fell 4 percent.
Analysts on average were expecting first-half EBITA of
885.67 million pounds, Thomson Reuters data showed. BAE also
raised its interim dividend by 3 percent to 8 pence per share.
Its order book rose to 43.1 billion pounds from 42.2 billion at
the end of last year.
The United States, which accounts for about 40 percent of
BAE's sales, began reducing its spending by $37 billion for the
fiscal 2013 year in March and its budget is set to shrink by $50
billion annually over the next nine years, unless Congress acts
to avoid these cuts.
BAE said it expected U.S. trading to remain tough but
manageable, while the UK would remain stable. Orders from
international customers and the UK were helping make up for
poorer U.S. demand, it said.
($1 = 0.6596 British pounds)
(Editing by Kate Holton and David Holmes)