BAE Systems Preliminary Results. 18 February 2010

Transcription

1 BAE Systems 2009 Preliminary Results 18 February

2 Overview , % Continued good performance Sales 20,000 15,000 10,000 Good programme execution Strong cash generation m 5, Well positioned Large forward order book Broad portfolio of programmes Multiple long term contracts Wide base of geographic markets Key national capability provider Underlying EBITA m 2,500 2,000 1,500 1, % Good basis for delivering sustainable growth in shareholder value 2

3 Business characteristics Platforms Products 40% Readiness & Sustainment 40% IT & Cyber 7% Electronics & Equipment 13% Analysis of 2009 sales by activity 3

4 Business characteristics Platforms & Products Surface ships submarines Guided weapons radar Aircraft vehicles 40% Readiness & Sustainment 40% IT & Cyber 7% Electronics & Equipment 13% Analysis of 2009 sales by activity 4

5 Business characteristics Platforms Products 40% Readiness & Sustainment Mission preparation Capability provision Through-life support 40% IT & Cyber 7% Electronics & Equipment 13% Analysis of 2009 sales by activity 5

6 Business characteristics Platforms Products 40% Readiness & Sustainment 40% IT & Cyber 7% 13% Electronics & Equipment Electronic systems Equipment Analysis of 2009 sales by activity 6

7 Business characteristics Platforms Products 40% Readiness & Sustainment 40% IT & Cyber Border & transport security Cyber security IT products & services 7% Electronics & Equipment 13% Analysis of 2009 sales by activity 7

8 George Rose 8

9 Financial Highlights Sales Underlying EBITA * Underlying earnings per share ** Cash inflow from operating activities Net cash Order book Dividend per share 22,415m 2,220m 40.7p 2,232m 403m 46.9bn 16.0p * earnings before amortisation impairment of intangible assets, finance costs taxation expense (EBITA) excluding non-recurring items ** earnings excluding amortisation impairment of intangible assets, non-cash finance movements non-recurring items 9

10 Income Statement 2009 Underlying 2008 Underlying 2009 Reported 2008 Reported Sales 22,415 18,543 22,415 18,543 Underlying EBITA Profit on disposed businesses Pension accounting gain Regulatory penalties 2,220 1,897 2, (278) 1, EBITA Finance (Expense)/Income deduct: Pension Interest / Mark-to-Market (707) (799) 2,271 (707) 2, Underlying Finance Costs (195) (102) Amortisation (286) (247) Impairment (973) (177) Tax (567) (467) (350) (640) Minority Interests (22) (23) Profit / (Loss) after Tax 1,436 1,305 (45) 1,768 millions 10

11 Balance Sheet 31/12/09 31/12/08 Intangible fixed assets Tangible fixed assets Investments Working capital Pension deficit Tax assets & liabilities Financial assets & liabilities Net cash Net assets 11,253 2, (6,839) (4,410) 850 (45) 403 4,727 12,306 2,558 1,040 (5,825) (3,325) ,289 millions 11

12 Operating Business Cash Flow 2009 Cash inflow from operating activities Capital expenditure (net) Dividends from equity accounted investments Contribution to Trust (re pensions) Operating business cash flow 2,232 (489) 77 (225) 1,595 Electronics, Intelligence & Support L & Armaments Programmes & Support International HQ & Other Businesses Operating business cash flow (366) 1,595 millions 12

13 Movement in Net Cash 2009 Net Cash 31 December 2008 Operating business cash flow Interest taxation Equity dividends paid Acquisitions disposals Net purchase of equity shares Foreign exchange other movements Net Cash 31 December ,595 (536) (534) (254) (20) millions 13

14 Pension Deficit - (IAS 19) bn 31 Dec Jun Dec 09 Pension assets Pension liabilities (17.3) (18.5) (20.6) Pension deficit, net (4.2) (5.9) (5.6) Group share of deficit, pre-tax * (3.3) (4.5) (4.4) Group share of deficit, post-tax (2.2) (3.1) (3.0) Real Discount Rates UK 3.4% 2.8% 2.2% US 3.5% 3.5% 2.9% * 30 June December 2009 include assets contributed into Trust 14

15 UK Discount Rates Inflation 8.0% 7.5% 7.0% 6.5% 6.0% Nominal AA Corporate Bond Yield 5.5% 5.0% 4.5% 4.0% 3.5% Nominal Inflation Rate 3.0% 2.5% 2.9% (10 yr avg ) 2.0% 1.5% Real Discount Rate 1.0% 31 Dec Dec Dec Dec Dec Dec Dec Dec Dec Dec Dec

16 Operating Groups 19% International Sales * 25% Electronics, Intelligence & Support Sales by activity 27% Programmes & Support 29% L & Armaments 40% Platforms & Products 40% Readiness & Sustainment 19% International Underlying EBITA * 25% Electronics, Intelligence & Support 7% IT & Cyber 13% Electronics & Equipment 29% Programmes & Support 27% L & Armaments * excluding HQ & Other Businesses 16

17 Electronics, Intelligence & Support SALES Electronic Solutions Support Solutions Sales $8,826m $8,260m Underlying EBITA * $900m $937m Information Solutions Platform Solutions Margin 10.2% 11.3% Order book $7.3bn $7.5bn IT & Cyber Readiness & Sustainment Cash flow $595m $704m Electronics & Equipment * excludes US pension accounting gain of $315m 17

18 L & Armaments SALES Global Tactical Systems Global Combat Systems Sales $10,550m $11,869m Underlying EBITA * $946m $1,049m Security & Survivability US Combat Systems Margin 9.0% 8.8% Order book $12.6bn $16.7bn Readiness & Sustainment Cash flow $752m $865m Platforms & Products Electronics & Equipment * excludes US pension accounting gain of $93m 18

19 Programmes & Support SALES Naval Sales 6,298m 4,638m Systems & Security Air Underlying EBITA 670m 491m Margin 10.6% 10.6% Order book 24.3bn 19.8bn Readiness & Sustainment Cash flow 285m 651m Platforms & Products Electronics & Equipment IT & Cyber 19

20 International SALES MBDA, Saab, Air Astana CS&S International Sales 4,253m 3,333m Underlying EBITA 442m 435m Australia Margin 10.4% 13.1% Order book 11.6bn 11.0bn Platforms & Products Readiness & Sustainment Cash flow 816m 163m Electronics & Equipment 20

21 HQ & Other Businesses Regional Aircraft Sales 254m 235m Shared Services Underlying EBITA * (71)m (101)m Research Centres Cash flow (366)m (66)m Property Management Head Office * excludes regulatory penalties of 278m 21

22 Financial Summary Sales Underlying EBITA * Underlying earnings per share ** Cash inflow from operating activities Net cash Order book Dividend per share 22,415m 2,220m 40.7p 2,232m 403m 46.9bn 16.0p * earnings before amortisation impairment of intangible assets, finance costs taxation expense (EBITA) excluding non-recurring items ** earnings excluding amortisation impairment of intangible assets, non-cash finance movements non-recurring items 22

23 Ian King 23

24 Agenda Markets US UK Strategy update Framework Actions 24

25 US defence Overall FY10 defence budget better than anticipated addressing higher manpower related costs continued high cost of overseas operations Core investment account spend internal planning assumes flat / reducing FY11 slightly up Increased procurement emphasis on:- programme performance programme relevance DoD funding $ bn FY01 FY02 FY03 FY04 FY05 FY06 FY07 FY08 FY09 FY10 FY11 Supplemental / Operations Other core Investment accounts QDR FY11 budget support planning assumptions 25

26 UK defence market Challenging environment Significant budget constraints continue Public expenditure constraints Meeting cost of overseas operations Progressive approach to align procurement to budget Programme stretch - eg Carriers Salam Typhoon diversions a significant alleviation Reductions in legacy fleets announced Anticipate Tornado Harrier reductions Nimrod MR2 Out of Service date accelerated Post election Strategic Defence Review planned 26

27 UK defence market but successes continue Industrial strategy for naval shipbuilding determined New Terms of Business Agreement signed Carrier manufacturing contracts signed New support agreements for Typhoon, Harrier, torpedoes Type 45 Through-life support strategy delivering for all stakeholders Multi-year commitments Successfully delivering savings improved availability Key to long term programme affordability opportunities remain Continuing to exp scope of support to UK armed forces 27

28 Group Strategic Framework Our vision is to be the premier global defence, security aerospace company Our mission is to deliver sustainable growth in shareholder value through commitment to Total Performance for all customers Our Strategy Customer focus Our Group Strategic Objective is Total Performance Through:- Financial performance Programme execution Responsible behavi Our values are - Trusted, Innovative Bold Strategic Actions Grow EI&S business both organically via acquisitions improve efficiency. Implement global l systems strategy deliver on efficiency rationalisation plans. Establish in the UK sustainably profitable throughlife business in air, l sea. Grow home markets in the Kingdom of Saudi Arabia, Australia India. Implement global initiatives in Security, Readiness & Sustainment Unmanned Aircraft Systems. Continue to develop global markets Integrated Business Plans 28

29 Group Strategic Framework Our vision is to be the premier global defence, security aerospace company Our mission is to deliver sustainable growth in shareholder value through commitment to Total Performance for all customers Our Strategy Our Our Group Group Strategic Strategic Objective Objective is is Total Total Performance PerformanceThrough:- Customer focus Financial performance Programme execution Our values are - Trusted, Innovative Bold Responsible behavi Strategic Actions Grow EI&S business both organically via acquisitions improve efficiency. Implement global l systems strategy deliver on efficiency rationalisation plans. Establish in the UK sustainably profitable throughlife business in air, l sea. Grow home markets in the Kingdom of Saudi Arabia, Australia India. Implement global initiatives in Security, Readiness & Sustainment Unmanned Aircraft Systems. Continue to develop global markets Integrated Business Plans 29

30 Group Strategic Framework Our vision is to be the premier global defence, security aerospace company Our mission is to deliver sustainable growth in shareholder value through commitment to Total Performance for all customers Our Strategy Customer focus Our Group Strategic Objective is Total Performance Through:- Financial performance Programme execution Responsible behavi Our values are - Trusted, Innovative Bold Strategic Actions Grow Grow EI&S EI&S business business both both organically organically via via acquisitions acquisitions improve improve efficiency. efficiency. Implement Implement global global l l systems systems strategy strategy deliver deliver on on efficiency efficiency rationalisation rationalisation plans. plans. Establish Establish in in the the UK UK sustainably sustainably profitable profitable through-life through-life business business in in air, air, l l sea. sea. Grow Grow home home markets markets in in the the Kingdom Kingdom of of Saudi Saudi Arabia, Arabia, Australia Australia India. India. Implement Implement global global initiatives initiatives in in Security, Security, Readiness Readiness & Sustainment Sustainment Unmanned Unmanned Aircraft Aircraft Systems. Systems. Continue Continue to to develop develop global global markets markets Integrated Integrated Business Business Plans Plans 30

31 EI&S - Driving growth from innovation technology Grow Grow EI&S EI&S business business both both organically organically via via acquisitions acquisitions improve improve efficiency. efficiency. Implement global l systems strategy deliver on efficiency rationalisation plans. Establish in the UK sustainably profitable throughlife business in air, l sea. Grow home markets in the Kingdom of Saudi Arabia, Australia India. Implement global initiatives in Security, Readiness & Sustainment Unmanned Aircraft Systems. Continue to develop global markets ROS Platform Self Protection (ATIRCM) Core: Communications /Networks Electronic Attack Services GEN 5 Electronic Warfare Systems (JSF, NS 11/12) Soldier Systems (Laser Targeting Enhanced Vision) Cyber Security Solutions (M1033, GGI) Power management (hybrid drive) Integrated Sensor Systems (CANES) Power Management module Traction module Battery module CAGR EI&S has a strong track record of generating good returns from innovative new technologies 31

32 L & Armaments Grow EI&S business both organically via acquisitions improve efficiency. Implement Implement global global l l systems systems strategy strategy deliver deliver on on efficiency efficiency rationalisation rationalisation plans. plans. Establish in the UK sustainably profitable throughlife business in air, l sea. Grow home markets in the Kingdom of Saudi Arabia, Australia India. Implement global initiatives in Security, Readiness & Sustainment Unmanned Aircraft Systems. Continue to develop global markets Sales 12,000 $m 10,000 L programme activity reducing Correction for operations-driven growth (eg MRAP) Loss of FMTV programmes 8,000 6,000 4,000 Efficiency improvement drive underway 2, New programme export opportunities eg FRES SV / Warrior upgrade NB Chart is indicative of trends only does not represent a forecast 32

33 Sustainable business in the UK Grow EI&S business both organically via acquisitions improve efficiency. Implement global l systems strategy deliver on efficiency rationalisation plans. Establish Establish in in the the UK UK sustainably sustainably profitable profitable through-life through-life business business in in air, air, l l sea. sea. Grow home markets in the Kingdom of Saudi Arabia, Australia India. Implement global initiatives in Security, Readiness & Sustainment Unmanned Aircraft Systems. Continue to develop global markets Air systems Typhoon - Tranche 2, Tranche 3 & export JSF - transition from development to production Partnered air support Surface ships Type 45 - Carrier - Future Surface Combatant New Terms of Business implementation Export ship programmes Naval support Submarines Astute - secure follow on boats Successor programme 33

34 Kingdom of Saudi Arabia Grow EI&S business both organically via acquisitions improve efficiency. Implement global l systems strategy deliver on efficiency rationalisation plans. Establish in the UK sustainably profitable throughlife business in air, l sea. Grow Grow home home markets markets in in the the Kingdom Kingdom of of Saudi Saudi Arabia, Arabia, Australia Australia India. India. Implement global initiatives in Security, Readiness & Sustainment Unmanned Aircraft Systems. Continue to develop global markets Defence environment BAE Systems in KSA Continued commitment to defence circa 7.7%GDP UK Govt to Govt Salam agreement signed in 2005 Modernisation of Saudi Armed forces Typhoon service entry with 8 aircraft delivered related contracts agreed Industrialisation plans being developed Approximately 4,900 employees Approx. 50% Saudi Nationals RSAF support operations at 7 bases Air ground based training services Ongoing support upgrade of Tornado fleet Support upgrade of RSN minehunters 34

35 Australia Grow EI&S business both organically via acquisitions improve efficiency. Implement global l systems strategy deliver on efficiency rationalisation plans. Establish in the UK sustainably profitable throughlife business in air, l sea. Grow Grow home home markets markets in in the the Kingdom Kingdom of of Saudi Saudi Arabia, Arabia, Australia Australia India. India. Implement global initiatives in Security, Readiness & Sustainment Unmanned Aircraft Systems. Continue to develop global markets Defence environment New Defence White Paper committed to 3% real growth in defence spend plans reconfirmed by new government industry role in delivering capability to armed forces BAE Systems in Australia Largest defence contractor in Australia 6,100 employees, Operations at 24 locations Major supplier of logistics support to armed forces Programmes across air, l sea sectors 35

36 India Grow EI&S business both organically via acquisitions improve efficiency. Implement global l systems strategy deliver on efficiency rationalisation plans. Establish in the UK sustainably profitable throughlife business in air, l sea. Grow Grow home home markets markets in in the the Kingdom Kingdom of of Saudi Saudi Arabia, Arabia, Australia Australia India. India. Implement global initiatives in Security, Readiness & Sustainment Unmanned Aircraft Systems. Continue to develop global markets Defence environment Significant growth market Possible expansion of budget from 2% of GDP to 3% Likely to become highly competitive Plans to upgrade capabilities of armed forces BAE Systems in India Joint venture agreement with Mahindra & Mahindra L systems In-country production of Hawk Jaguar with HAL Software government security opportunities 36

37 Implementing the global initiatives Grow EI&S business both organically via acquisitions improve efficiency. Implement global l systems strategy deliver on efficiency rationalisation plans. Establish in the UK sustainably profitable throughlife business in air, l sea. Grow home markets in the Kingdom of Saudi Arabia, Australia India. Implement Implement global global initiatives initiatives in in Security, Security, Readiness Readiness & Sustainment Sustainment Unmanned Unmanned Aircraft Aircraft Systems. Systems. Continue to develop global markets Security Focus on information based intelligence solutions Strong position in high priority cyber sector Key capability provider to US UK agencies Pursuing opportunities in other home markets Readiness & Sustainment Strong established position in UK KSA Increasing scope of support activity Budget constraint expected to drive further opportunities Australian market developing Large potential in US Unmanned Air Systems Focus on autonomous systems application of advanced sensors UAS platform developments progressing well Herti demonstrations, Mantis first flight, Coyote first flight 37

38 Rest of World markets Grow EI&S business both organically via acquisitions improve efficiency. Implement global l systems strategy deliver on efficiency rationalisation plans. Establish in the UK sustainably profitable throughlife business in air, l sea. Grow home markets in the Kingdom of Saudi Arabia, Australia India. Implement global initiatives in Security, Readiness & Sustainment Unmanned Aircraft Systems. Continue Continue to to develop develop global global markets markets 9% of 2009 sales outside Home Markets Significant export opportunities including in:- Oman Canada Japan Major campaigns underway including for:- Typhoon M-777 CV90 Mine protected vehicles Exportability expected to become an increasingly important criteria in affordability of UK defence procurements eg:- Tranche 3 Typhoon Future Surface Combatant 38

39 Broadly based business Well defined strategy Focus on defence, security aerospace Programme diversity Large portfolio of programmes Through-life support Market diversity Leading positions in multiple home markets All armed forces, government security Continuously evolving capabilities Addressing high growth opportunities Adapting to future priority requirements Active strategic development Organic investments Acquisitions Disposals Performance is key Programme execution Integrated Total Performance approach Strength of business from diversity within clearly bounded strategy 39

40 Summary % Further progress against strategy broad base of business multi-home Market positions Underlying EPS pence Good visibility large order book realistically based plans Continued good performance delivering against plan DPS pence %