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Pension deficit triples at arms firm
By Jack SommersAugust 03, 2009
THE world’s third largest arms manufacturer has seen its pension deficit triple in the past year.
BAE Systems Ltd – which has offices in Farnborough and Frimley – has seen its deficit go from just over £1bn in the first six months of 2008 to more than £3bn in the same period this year.
This was in spite of an increase in sales that earned the company £9.9bn compared with £7.75bn last year.
The company employs around 2,000 people in Farnborough and Frimley.
The pension deficit is due to the bonds the company has bought collapsing in value and inflation.
On paper, the company made a loss of £70m compared with £599m profit the same time last year.
But a BAE spokesman said this was because it had to record a loss of £991m related to its "intangible assets", an accounting term for assets such as trademarks and patents.
The spokesman said this was "an accounting quirk" because it did not refer to any money changing hands.
Profit
The company’s net profit for the first six months of 2009 was £979m, compared with £820m a year ago.
As well as making more money, the company now has £45bn in contracts waiting to be carried out, up from £41.1bn.
Some of its recent projects include HMS Daring, the first in a new class of destroyer for the Royal Navy, and the new Queen Elizabeth Class aircraft carriers.
Rory Fisher, the managing director of these projects, said: "We have achieved some notable successes in the first half of 2009 and as we move through the remainder of the year our focus is to build on our strengths and achieve our goal of becoming our customers’ dependable partner of choice."
The biggest profit increase was in the company’s electronics, intelligence and support areas, which went from £1.9bn to £2.8bn.
The armaments arm of its business increased to £3.2bn from £2.6bn.
BAE employs 3,600 people at 12 sites across the country. It is the largest arms manufacturer in Europe.
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