Stop to 325.0 to lock in 20.4

Stop to 330.0 to lock in 25.4

Stop to 335.0 to lock in + 30.4

HMS Audacious: MoD announces £1.2bn submarine contract

A new attack submarine, HMS Audacious, has been commissioned by the Ministry of Defence in a contract worth £1.2bn.

The BAE Systems deal, which will secure 3,000 jobs at Barrow-in-Furness in Cumbria, will progressively replace the Trafalgar Class currently in service.

A further £1.5bn has been committed to the remaining three Astute Class submarines being built, the MoD said.

Stop to 340.0 to lock in 35.4

BAE warns failure to agree Typhoon price with Saudi might hit profits

British defence giant BAE Systems warned profits might be lower than expected in 2012 because it has still failed to agree a price with Saudi Arabia for its Typhoon fighter jets despite securing the order five years ago.

The FTSE 100 company said “issues remain to be resolved before contract pricing, acceptable to all parties, can be agreed” on the programme to supply 72 jets to the Royal Saudi Air Force. It is a government to government deal known as “Salam” and worth roughly £4.5bn in total.
BAE said that if an agreement on price was not reached by the time it publishes its full-year results on February 21, the group’s underlying earnings per share would be about 3p per share lower than previously expected.
Analysts had been expecting earnings per share of around 40p, and a dividend of around 19p for the full year.
“The dividend wouldn’t be affected unless there was more and more slippage in earnings,” said Edward Stacey, analyst at Espirito Santo.
Mr Stacey said that despite the warning, he believed the Middle East would be a good growth market for BAE and has a “buy” recommendation on the shares.

Shares fell 1pc on Wednesday.
“Acceptable pricing terms remain the group’s driver to such an agreement, not the timing of the settlement,” BAE said. The Salam deal was originally struck before the global financial crisis took hold when the economic backdrop was far stronger.
BAE finalised a deal with Saudi in 2007, and delivered a total of 24 Typhoon aircraft between 2008 and 2011. It is thought that the price negotiations being thrashed out are partly retrospective.
The company said “all parties remain committed to the programme” and said building of the aircraft for the Royal Saudi Air Force continued, with delivery expected to start again in 2013.
BAE said it had made progress on some of its other work in Saudi, including negotiation on contracts to support and provide equipment under the Saudi British Defence Cooperation Programme for the next five years, which are expected to be signed before the end of 2012.
In May, BAE won a £1.6bn contract to support Royal Saudi Air Force training, which includes the supply of 22 new Hawk trainer aircraft, 55 Pilatus PC-21 aircraft, and other training equipment.
Last month David Cameron embarked on a major push to secure new Typhoon orders for BAE while on a three-day visit to the Middle East. It is hoped that Saudi will place what Downing Street sources described as a “substantial” order for more jets, on top of the 72 already agreed.
It is understood BAE is close to securing an order for 12 Typhoon jets from Oman, with hopes than an agreement will be reached by the end of the year.

Re Contract

BAE Systems and the Government of the Sultanate of Oman have entered into a contract for the supply of Typhoon and Hawk Advanced Jet Trainer aircraft to the Royal Air Force of Oman. The contract, valued at approximately £2.5 billion, provides for the delivery of 12 Typhoon and 8 Hawk aircraft starting in 2017.

BAE Systems is the prime contractor for both the provision of the aircraft and the agreed arrangements for in-service support.

Great News..

Closed (spreads) @ 342.8 + 38.2

Nice one squirrel.

Probably being greedy, back in long on the spreads @ 350.4 if it can breach strong resistance @ 360.0 next target 380.0 pure punt. Tight stop @ 344.0

Final Results

FINANCIAL KEY POINTS

- Sales1 reduced by 7%

- Underlying EBITA2 reduced by 6% to £1,895m. Deferred recognition of sales and profit relating to the formalisation of price escalation on the Salam Typhoon programme

- Underlying earnings3 per share down by 2% (excluding the benefit in 2011 of the UK tax settlement)

- Order backlog1,5 increased by 8% to £42.4bn

- Non-US and UK order intake1 increased to £11.2bn from £4.8bn in 2011

- Total dividend increased by 4% to 19.5p

- Operating business cash flow6 increased to £2.7bn

- Net cash7 balance of £387m

- Three-year share repurchase programme of up to £1bn initiated

- Longevity risk on £2.7bn of pension scheme liabilities transferred to the insurance market

OUTLOOK

This outlook statement assumes US budgets are subject to Continuing Resolution for the first quarter of 2013 only and does not reflect the impact that might result from a US sequestration.

Subject to near-term uncertainties relating to US defence budgets, modest growth in underlying earnings3 per share is anticipated for 2013. This excludes any benefit from the share repurchase programme in 2013. In addition, and assuming a satisfactory conclusion to Salam pricing negotiations this year, there would be a further increase of around 3 pence in underlying earnings3 per share.

- Electronic Systems sales1 are expected to be at a similar level to those in 2012 with margins expected to be slightly lower within a range of 12% to 14%.

- Cyber & Intelligence sales1 are expected to be marginally lower than those in 2012 with margins expected to be within an 8% to 9% range.

- In Platforms & Services (US), Land & Armaments sales1 are expected to be approximately 10% below the 2012 level with margins around 8%. Support Solutions sales1 are expected to be marginally higher than in 2012, with slightly reduced margins.

- Platforms & Services (UK) sales1 in 2013 are expected to increase by around 25%, assuming a price escalation settlement and resumption of aircraft deliveries on the Salam Typhoon contract. Margins are expected to be similar to those in 2012.

- Platforms & Services (International) sales1 are expected to be marginally higher than in 2012. Margins are expected to benefit from the anticipated resolution of Salam Typhoon price escalation, and are expected to be at the top end of a 10% to 12% range.

- HQ costs are expected to be more than 10% lower than in 2012 and Group earnings3 are expected to reflect marginally lower underlying finance costs. An effective tax rate within a 23% to 25% range is expected.

Director/PDMR Shareholding

The Company was notified today that Charlotte Lambkin, a Person Discharging Managerial Responsibilities, exercised options over 8,226 ordinary shares of 2.5 pence each in BAE Systems plc under the BAE Systems Performance Share Plan at nil consideration on 22 February 2013 and subsequently disposed of 4,994 of those shares at a price of 350.087 pence per share. The transaction took place on the London Stock Exchange.

This stock has been pretty consistant for the last five years,rising in Nov/Dec then takes a bath around now. Way the market is going reckon it will easily go through 380.0, any sign of weakness good for a short punt.

Sell order triggered on the spreads @ 376.80 tight stop.

Out for now @ 383.71 - 6.91

Probably knitting fog, another bash at a short on the spreads @ 385.89 tight stop.

Stop to entry for risk free trade.

No sign of weakness whatsoever :O) Suspect increase in divi by 4% to 19.5p has a lot to do with it. (Ex-Divi 17/04 record date 19/04). If 400.0 breached can see 420.0 next resistance and 5 year highs. Think I'll just wait and see how it plays out next week still think it could go either way.

Had a go at breaking 400.0, may well crack it today.