BAE Reports Loss For Most Recent Quarter

by: Matthew Potter
July 30, 2009

Category: BAE Systems, Business Line, Companies, Congress, Countries, Department of Defense, Earnings, England, Events, Oshkosh Truck Corp, production program, Services | RSS 2.0

BAE Systems reported its most recent quarterly results and had a loss of just over $135 million. The same quarter last year saw profits of over $800 million. The English company was hit badly by a downturn in the U.S. market for Mine Resistant Ambush Protected (MRAP) vehicles as the contracts for those vehicles needed in Iraq ended. Oshkosh was able to win the new MRAP-ATV contract that will supply lighter, more maneuverable vehicle to be used in Afghanistan.

BAE like all of the other major defense contractors is looking askance at the future Obama budgets. It has a role to play in the F-22 and Future Combat Systems (FCS) programs ended in the 2010 budget. This is revenue that may not be made up with new contracts. The company does support the F-35 JSF as well which will see an acceleration if plans are carried out.

There may also be a future blow back against the non-U.S. companies politically if the defense budget does decline severely in the next few years. The limited work might be directed to those remaining big contractors that are home based. BAE has made efforts to expand into the market through acquisition of U.S. companies and capabiliites so that might cushion any blows.

Earnings have been mixed this quarter and the results in nine to twelve months will tell the real story of how the defense market is falling out.

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