Delays in negotiations with Saudi Arabia over the pricing of Eurofighter Typhoon jets could negatively impact BAE Systems’ full-year earnings, the UK defence contractor said.
BAE has so far delivered 24 out of the 72 aircraft agreed with the Gulf kingdom in the 2007 government-to-government ‘Salam’ deal.
BAE said that its 2012 profits for the full-year, due to be published on February 21, could be hit by as much as GBP£0.03 (US$0.05) per share if talks over pricing did not conclude before the end of the financial year.
“Whilst progress has been made through the course of these negotiations, issues remain to be resolved before contract pricing, acceptable to all parties, can be agreed,” Europe’s biggest weapons contractor said in a statement to the London Stock Exchange.
BAE also said that it had made progress on further contracts in Saudi Arabia, including a five-year deal to provide forces with support equipment under the Saudi British Defence Co-operation Programme. BAE said it expected an agreement to be finalised before the end of this year.
BAE, which earlier in 2012 abandoned an attempted merger with European aerospace giant EADS, in May secured a GBP£1.6n deal with the Royal Saudi Air Force, which included the provision of 22 Hawk trainer jets, 55 Pilatus PC-21 aircraft and other training equipment.
According to a report carried by Bloomberg on Wednesday, BAE will also announce this week an agreement to sell 12 Eurofighter Typhoon jets to Oman in a deal worth more than US$1bn.
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