BAE Systems issued a profits warning yesterday, as negotiations over a key multi-billion 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, 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 and has basically been agreed but the two sides have yet to settle the final terms of the deal.
"Whilst 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 with 37p in 2011.
Shares in BAE fell by 4p yesterday to close at 341.3p.