BAE Systems on track

BAE Systems says trading has been consistent with management expectations and the outlook for 2016 remains unchanged, with group underlying earnings per share expected to be approximately 5% to 10% higher than last year's adjusted underlying earnings per share of 36.6p.

A trading update says: "In the UK we have made good progress working with our MoD customer on implementing the Strategic Defence and Security Review. A Typhoon support partnership agreement, expected to be worth £2.1bn over a ten year period, was signed in July.

"In the maritime domain, the UK Successor Submarine production programme has commenced with first steel cut on the 5th October and approximately £1.3bn of funding committed for the initial production award. In surface ships we are progressing towards defining an overall Type 26 build contract and a contract is being finalised for the fourth and fifth new River Class Offshore Patrol Vessels."

It adds: "In the US the defence market outlook remains positive and the production ramp up on a number of the Group's long term programmes is progressing to plan. A Continuing Resolution went into effect on 1st October under which the Group does not expect any material disruption in the near term.

"In August we delivered ship six under our commercial shipbuilding contracts. The remaining two ships are expected to be completed in 2017. In our ship repair business the additional dry dock capacity for the San Diego operations remains on track to be operational in early 2017.

"Export activity continues to be supported by the UK government and, although there can be no certainty as to the timing of orders, discussions with current and prospective operators of the Typhoon aircraft continue to support the Group's expectations for additional Typhoon contract awards.

"Discussions between BAE Systems, the UK government and the Saudi Arabian government are progressing to define the scope and terms of the next five-year Saudi British Defence Co-operation Programme."

At 9:39am: (LON:BA.) BAE Systems Plc share price was +1.75p at 539.75p