BAE warns of hits from US floods, budget doubts


Europe’s biggest defence contractor BAE Systems warned that serious flooding at one of its plants in the United States and uncertainty over federal budgets may disrupt sales and trading.

“The group is assessing the implications of serious flood damage at its Johnson City electronics facility following recent severe weather along the U.S. east coast. This may result in some sales deferral to 2012, but is not expected to be material to this year’s earnings,” BAE said in a statement.

The British group said trading since July 1 had been in line with management expectations and that it still expected underlying earnings per share for the year to be broadly similar to 2010’s restated earnings, Reuters reports.
“Some near-term disruption to trading is anticipated as the U.S. administration again operates federal budgets under a Continuing Resolution,” BAE said.

The company also noted “significant uncertainty” over future defence spending in the United States.

U.S. Defence Secretary Leon Panetta said on Tuesday that the Pentagon would have to cut outlays on personnel, benefits and equipment as it makes difficult choices required to reduce security spending by $450 billion (288 billion pounds) over the next decade.