LONDON -- BAE Systems (LSE: BA.L) climbed 1% to 325 pence during early trading this morning after the defense contractor confirmed that it still expects "modest growth in underlying earnings per share" for 2012. BAE's growth projection accompanied an update on the group's progress since the start of July.
The FTSE 100 member added that the projection was dependent on a "satisfactory conclusion to the pricing negotiations this year with the Saudi Arabian government on the Typhoon Salam program."
The City's current earnings consensus is around 40 pence per share, placing the shares on a possible P/E of eight.
The group claimed the defense environment in the U.K. remained "stable," although the outlook for the U.S. government defense budget continued to be affected by "uncertainty as to how the U.S. federal deficit reduction will be implemented."
BAE said new-business highlights since July included the U.K. government reaffirming its commitment to replacing certain Royal Navy frigates from 2021 and a 190 million pound contract from the U.S. military to upgrade 353 Bradley fighting vehicles.
Today's statement followed yesterday's news that BAE and EADS, the Franco-German aerospace group, had scrapped plans to merge. Reflecting on the deal's breakdown, BAE chief executive Ian King said:
We are obviously disappointed that we were unable to reach an acceptable agreement with our various government stakeholders. We believe the merger presented a unique opportunity for BAE Systems and EADS to combine two world class and complementary businesses to create a world leading aerospace, defense and security group. However, our business remains strong and financially robust. We continue to see opportunities across our platforms and services offerings and in the various international markets in which we operate. We remain committed to delivering total shareholder value and look to the future with confidence.
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