BAE Systems issued a profits warning yesterday, as negotiations over a key multibillion dollar contract to supply Typhoon aircraft to Saudi Arabia look set to drag into next year.
Already struggling after the failure of its proposed £30bn merger with EADS, BAE heaped further misery on to shareholders yesterday warning that about 7.5 per cent could be wiped off its profits this year because of delays in finalising the so-called Salam agreement.
This contract to supply 72 Typhoon aircraft is worth about £4.5bn has basically been agreed but the two sides have yet to agree the final terms of the deal.
"While progress has been made through the course of these negotiations, issues remain to be resolved before contract pricing, acceptable to all parties, can be agreed," a BAE spokesman said.
"Should an 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 3 pence per share," the spokesman added. The consensus analyst forecast for earnings per share is 40.3p, compared to 37p in 2011.
Ian King, above, BAE's chief executive, said in August that his group would deliver "modest growth" for 2012 subject to finalising the deal with Saudi Arabia, which he said he expected in the second half of the deal.
The profits warning comes as a further blow, following the collapse of the EADS merger earlier this year.