Farnborough-based BAE Systems saw its profits decrease by £780 million last year.

The global defence company announced its full year results on Thursday last week which showed its profit for the year fall from £959 million in 2012 to £176 million in 2013.

The fall is being blamed on cuts in defence spending in the USA, where the company receives around 44% of its revenue, however, Ian King, chief executive of BAE Systems, said the group delivered a ‘solid performance’ last year against the background of reduced spending and challenging market conditions.

Despite the loss in profits, the company’s sales increased by 2% to £18,180 million.

Mr King said: “A proactive focus on costs and enhanced competitiveness protected our margins across the majority of the business and we secured further contract wins in the US, Saudi Arabia and internationally. We have started 2014 with good momentum with a settlement on Salam pricing, US budgets in place and a well-defined UK Maritime sector plan.”

Mr King added: “Budget pressures in some of the Group’s larger markets are expected to prevail but BAE Systems has a broad-based portfolio.

“Our strong order backlog and robust balance sheet provide a solid basis for growth over the medium term.”