BAE Systems expects Covid-19 shock to hit in next three months
Defence giant BAE Systems expects "more significant disruptions" to its business as it enters the second quarter of the financial year, after an opening three months where the coronavirus pandemic had little impact.
The company, which has a land combat vehicles operation in Telford, said it was continuing to assess the situation and would update shareholders on whether to expect a dividend in July when it releases half-year results.
The defence firm will also take a decision on how much to pay its directors at that point. Many other London-listed companies have announced their top management and boards will take pay cuts while the crisis lasts.
"As the second quarter commences, we are seeing more significant disruptions," the company said.
It added: "In the first quarter of 2020, the pandemic has had no material impact on the financial performance of the group."
Recently, BAE systems has won contracts to supply self-propelled howitzers and a missile-defence system, and repair US ships.
Last year it was also announced that hundreds of new jobs could be created at the site in Telford as part of a £2.8 billion contract to provide the British Army with more than 500 new armoured fighting vehicles.
The Boxer armoured vehicles are expected to be built in Hadley Park by a joint venture between two defence companies – Rheinmetall and BAE Systems, known as RBSL.
BAE said the company's annual shareholder meeting will not be held in person, as groups of more than two people are banned from meeting up. Instead, shareholders can vote online and in the post.
BAE said: "The company is in a strong position with a large order backlog, mainly consisting of long-term Government contracts across a wide international customer base."
Many staff are working from home during the pandemic and sites have reduced their operational levels, BAE said.
It added that is proposed acquisitions of Collins Aerospace's military global positioning system business and Raytheon's airborne tactical radios business will still go ahead in the coming months. The financing is already in place.
BAE said: "Whilst the Covid-19 pandemic will impact our previous guidance for 2020, at this stage it is not possible to predict either the duration of the disruption or its impact on the 2020 outturn. A further update will be provided when appropriate."
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