BAE Systems Sees Risks if 'Brexit' Spurs Scottish Independence Push
May 04 2016 - 8:41AM
Dow Jones News
By Robert Wall
LONDON--BAE Systems PLC Chairman Roger Carr on Wednesday said a
British exit from the European Union harbored risks to the U.K.
weapons maker, including potentially spurring independence
sentiments in Scotland.
Mr. Carr said the risk to BAE Systems from lost sales is "very
small" since the company has few exports to those countries. Still,
he said there were short-term risks to the overall economy and
longer-term risks to the integrity of the U.K. Britain on June 23
will hold a referendum on whether to remain in the EU.
Polls in Scotland have suggested a U.K. exit from the EU could
revive a push in Scotland for independence, after Scots voted in
2014 to remain in the U.K. Mr. Carr said at the company's annual
shareholder meeting that such a split would be detrimental for BAE
Systems, which builds its warships in Scotland.
At the shareholder gathering, Mr. Carr faced repeated questions
over arms sales to Saudi Arabia amid allegations of their misuse
during the war in Yemen. Mr. Carr said the company would continue
to abide by government policies and that weapons wouldn't flow if
export licenses weren't granted.
The British parliament's International Development Committee on
Wednesday expressed concern about some of the country's arms
exports to the Middle East. The committee said the Committee on
Arms Export Controls should consider suspending sales to Saudi
Arabia "until there is evidence that no 'clear risk' that arms
exported from the U.K. might be used in the commission of a serious
violation of [international humanitarian law] in the country," said
the development committee's chairman, Stephen Twigg, a member of
the opposition Labour Party.
Ahead of the shareholder meeting, BAE Systems on Wednesday said
business in 2016 has started well, allowing Europe's largest arms
maker to confirm its full-year earnings targets.
Deals secured in the first few months of the year included a
commitment by the U.K. and France to jointly build a combat drone
demonstrator under a GBP1.6 billion ($2.3 billion) program, a
contract from the British government to continue development work
on the future Type 26 combat ships, and a Kuwaiti order for 28
Eurofighter Typhoon combat aircraft. The Typhoon is jointly built
by BAE Systems--which will gain about GBP1 billion from the
deal--Airbus Group SE and Finmeccanica SpA, which secured the
Kuwait contract.
"Whilst economic and geopolitical conditions remain volatile, we
have started the year with good momentum and the business is
performing well, " Chief Executive Offiicer Ian King said ahead of
the company's annual shareholder meeting later in the day.
BAE Systems said underlying earnings per share this year should
rise 5% to 10% over the 36.6 pence in adjusted underlying earnings,
which excludes some one-time tax benefits, reported for 2015.
BAE Systems is in the middle of a leadership transition process.
The company in February named oil industry executive Charles
Woodburn to the newly created post of chief operating officer,
making him the heir apparent to the CEO. The handover isn't
expected before next year.
BAE Systems also said the European missile joint venture of
MBDA, involving Airbus and Finmeccanica, also continued to secure
deals. The value of first-quarter deals to BAE, which owns 37.5% in
the partnership, was GBP182 million, the company said.
Write to Robert Wall at robert.wall@wsj.com
(END) Dow Jones Newswires
May 04, 2016 08:26 ET (12:26 GMT)
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