Oil slump costs BAe pounds 500m
Friday 18 September 1998
The fall in oil prices from $19 a barrel last year to $12 is estimated to have caused a cash outflow of about pounds 500m in BAe's finances in the first half.
Fears over the outflow prompted a 12 per cent fall in BAe shares. BAe posted a net cash outflow of pounds 518m and disclosed that its defence division had negative cash flow of pounds 506m.
The shortfall arises because the Tornado fighter jets ordered by the Saudis through the Al Yamamah deal are paid for with 600,000 barrels of oil a day. The oil is traded through Rotterdam and the cash proceeds are passed to BAe through the British Government.
Sir Dick Evans, the BAe chairman, sought to reassure investors that the shortfall was temporary and that the Saudis would honour the outstanding sums due under the contract, denominated in sterling.
John Weston, BAe's chief executive, added that the cash position would be "reversed with a substantial customer payment" in the neat future.
He was speaking as BAe reported a 24 per cent rise in pre-tax profits to pounds 344m and said it would like to see the US defence giant, Lockheed, take a stake in the Airbus programme.
BAe also said it was continuing to hold discussions with Daimler-Benz Aerospace, one of its Airbus partners, about a link or merger.
Mr Weston said he was keen to agree a transatlantic alliance, but this would probably have to wait until the creation of a single European aerospace and defence company had been completed. As an interim step Lockheed could be invited to join Airbus - due to convert to a single corporate entity next year - probably as a partner on the $10bn super-Jumbo project.
BAe also continues to seek an overseas partner for its troubled Royal Ordnance ammunition business.
Operating profits from defence rose to pounds 303m and the group order book increased to a record pounds 24bn.
- 1 Florida man sentenced to two-and-a-half years for having sex on the beach in front of a child
- 2 Autistic teenager beaten up by bullies makes them watch 20-minute video about autism
- 3 Nick Kyrgios calls former Olympian Dawn Fraser a 'blatant racist' after she tells Wimbledon star to 'go back where their parents came from'
- 4 World learns of app that shows you who unfriended you on Facebook, app promptly crashes
- 5 Chris Moyles reportedly set to make radio comeback with new breakfast show on XFM
More Britons believe that multiculturalism makes the country worse - not better, says poll
Osborne to cap family benefits at £23,000 – announced ahead of his post-election Budget
Nathan Collier: Montana man inspired by same-sex marriage ruling requests right to wed two wives
Sickness and disability benefits could be reduced by £30 a week as part of £12bn welfare cuts
Greece debt crisis: Angela Merkel and Francois Hollande issue Athens with 24-hour ultimatum to avoid crashing out of the euro
Greece crisis: Referendum exposes a gaping hole at the heart of the European Union – its lack of genuine legitimacy
iJobs Money & Business
£40000 - £95000 per annum: Recruitment Genius: This is an exciting opportunity...
competitive: SThree: Are you passionate about sales?Do you have a keen interes...
£17000 - £30000 per annum: Recruitment Genius: This is an exciting opportunity...
£15000 - £17000 per annum: Recruitment Genius: This company offers a range of ...