Shares in defence firm BAE Systems dived 9 per cent early today after the company posted disappointing first-half earnings hit by production delays and shipbuilding losses.
BAE posted a 25.5 per cent drop in pre-tax profits to £359 million sterling before exceptionals and goodwill amortisation for the six months to June 30th, below market expectations, as sales fell 9.4 per cent to £5.7 billion.
Shares in BAE dropped 22-3/4 pence to 248-1/4p, off a low of 239 pence, by 0918 GMT in a weaker market. The benchmark FTSE 100 Index was down 1.5 per cent. The stock has fallen 27 per cent in the past three months, although it has outperforming the index of leading British shares.
The market also seized on a condition to BAE's outlook that the long-flagged return to profit growth in 2003 was now dependent on the impact on military spending of a shift by the British Ministry of Defence towards electronic warfare.
"We have to see where we go on those discussions with the Ministry of Defence, where the programme emphasis now is and how that changes some of the timing on some of the programmes," BAE chief executive Mr Mike Turner said.
In a letter to shareholders, BAE chairman Mr Richard Evans said: "We continue to plan for a resumption in growth in 2003, although we face a number of challenges".