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BAE to plug pensions hole as profit rises

By August Graham, PA City Reporter

The boss of defence giant BAE systems hailed a “year of significant progress” as his company showed strong financials and announced a new deal for its pensioners.

The business saw revenue hit £18.3 billion, an increase of 7%, in 2019, chief executive Charles Woodburn and his team revealed on Thursday. Operating profit, meanwhile, grew to nearly £1.9 billion, up 18% year on year.

Mr Woodburn said: “2019 has been a year of significant progress for BAE Systems. We delivered a good set of financial results in line with guidance, growing sales and earnings, with improved operational performance and increased investment in the business to underpin our growth outlook.”

Apart from in aerospace, BAE’s largest business unit which accounted for around 40% of profit, operating profit grew in all business areas. The company operates in electronic systems, cyber and intelligence, platforms and services, and maritime.

During the year BAE signed a new deal to accelerate its delivery of the Typhoon fighter jet to Qatar. It also has a deal to provide Hawk training aircraft to the country’s military.

BAE Systems also told shareholders on Thursday that it had reached a new deal with its pension trustees to help plug a £1.9 billion hole in its pension pot.

The business will now make a one-off payment of £1 billion into the fund “in the coming months”.

This will come alongside a £240 million payment over the course of the year ending March 2020, and a further £250 million over the following 12 months.

“Strategically we took a number of actions to strengthen the portfolio, and the pensions agreement announced today is good for all stakeholders,” Mr Woodburn said.

“These will help to accelerate our strategy and further our growth outlook. We have a large order backlog and remain focused on strong programme performance to deliver a sustainable business model with enhanced financial performance.”

Shares were up 2.2% at 654p on Thursday morning.