BAE Systems dives into the red

BAE Systems has said it will writedown $929 million (592 million pounds, 681 million euros) on 2009 earnings after failing to win a US military contract.

BAE Systems on Thursday announced it had fallen into a loss last year after a major write-down linked to its purchase of US military group Armor Holdings.

BAE Systems said it suffered a net loss of 67 million pounds (77 million euros, 105 million dollars) in 2009 compared with profit after tax totalling 1.745 billion pounds in 2008.

BAE said in an earnings statement that it was hit by a charge of 973 million pounds, primarily relating to intangible assets acquired when it bought Armor Holdings in 2007.

More than half of the write-down was due to BAE failing to get a US military contract he had expected to win — costing the group 592 million pounds.

BAE Systems on Monday said it had lost an appeal against a US government decision last year not to award Armor Holdings a follow-on contract to make military trucks.

The British company added on Thursday that underlying pre-tax profits climbed 17 percent to 2.22 billion pounds in 2009, while group revenue increased 21 percent to 22.42 billion pounds.

“The Group continues to expect growth for 2010 based on constant exchange rate assumptions,” BAE said in the statement.

But it warned that defence budgets in Britain and the United states were “expected to come under further pressure, and with expectations of a more challenging business environment ahead, the focus on driving performance and efficiency in the business will be key.