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 Exclusive: Abusers using spyware apps to monitor partners reaches 'epidemic proportions'
- 2 Margaret Thatcher 'expressed fears of Asian rising' at Anglo-Irish summit in 1984
- 3 Sussex couple die in suspected Christmas Day 'suicide pact'
- 4 The 'Black Museum': After 150 years, public set to see exhibits from police’s grisly crime museum
- 5 The Unluckiest People of the Year 2014 (and one very unlucky giraffe)
Exclusive: Abusers using spyware apps to monitor partners reaches 'epidemic proportions'
UK weather: Warning for more snow and ice as freezing temperatures and gales hit Britain
UK weather: Travel chaos continues as King's Cross train delays add to snow on roads
The Unluckiest People of the Year 2014 (and one very unlucky giraffe)
North Korea calls Barack Obama 'a monkey' in latest attack as 'The Interview' row festers
British actor Idris Elba cannot star as James Bond because he is black, says shock jock Rush Limbaugh
Germany anti-Islam protests: 17,000 march on Dresden against 'Islamification of the West'
Ukip member gets into Christmas spirit with Union Flag plea to Santa 'for our country back'
Immigrants make UK racist, says Ukip councillor Trevor Shonk
BBC director Danny Cohen: Rising UK antisemitism makes me feel more uncomfortable than ever
Katie Hopkins speaks out on childhood obesity: 'Parents of fat children should be prosecuted for child cruelty'
iJobs Money & Business
Not specified: Selby Jennings: VP/SVP Credit Quant Top tier investment bank i...
Not specified: Selby Jennings: Quantitative Research | Global Equity | New Yor...
Not specified: Selby Jennings: SVP Model Validation This top tiered investment...
Highly Competitive: Selby Jennings: Our client, a leading European Oil trading...