BAE Systems, Europe's biggest weapons maker and owner of two Clydeside shipyards, yesterday reported a 22% rise in underlying profits to £1.48bn for 2007, boosted by five-months trading from US acquisition Armor Holdings - a manufacturer of military vehicles and body armour - and strong trading across all the company's divisions.
The figures met City analysts' forecasts.
The company lifted second-half earnings by 28%, mainly from revenue from Bradley Fighting Vehicles and blast-resistant Humvees used by US forces in Iraq and Afghanistan.
Chief executive Mike Turner said BAE's end-December order book stood at £38.6bn, up 22% year-on-year.
The final dividend was set at 7.8p, making the total for the year 12.8p, up 13.3%.
Turner said the company expected the government would extend delivery deadlines for planned defence projects to meet budget constraints, but would not cancel them.
Otherwise, "we have excellent forward visibility and a year of good growth is anticipated in 2008," he added.
Turner said if the government went for an extended defence timetable it would pay more in the long run, because future technology costs more, albeit for a better product.
He said BAE's end-December order book stood at £38.6bn, up 22% year-on-year.
UBS analysts said: "BAE painted a positive picture with its outlook statement," and repeated their "buy" rating on the stock, with a 570p target.
BAE is involved in many US and British military projects, including the F-35 Joint Strike Fighter, Type 45 destroyer, Astute submarine and mine-resistant ambush-protected vehicles for use in Afghanistan and Iraq.
The Ministry of Defence, which is set to put the final seal on an order for two new aircraft carriers, also has plans to confirm a military flying training system project, and state its plans for new medium-weight armoured vehicles.
Turner said BAE was ready to sign a ship-building joint venture with the VT Group once the government put the final seal on a deal for two new aircraft carriers.
The company intends to bid for a contract for six tanker ships for the Royal Fleet Auxiliary.
Much of the initial carrier work will go to BAE's two yards at Govan and Scotstoun in Glasgow but the tankers will be built in South Korea if the company wins the contract.
BAE also makes howitzers, bridge-laying vehicles and self-propelled artillery. Its markets are located in the UK, the United States, Sweden and Australia as well as Saudi Arabia.
BAE won a £4.43bn deal for 72 Eurofighter Typhoon combat jets from Saudi Arabia last September, nine months after the Serious Fraud Office ended an inquiry into BAE's previous Saudi deals.
In December 2006, then Prime Minister Tony Blair stepped in to halt the inquiry, which had angered Saudi Arabia, citing risks it posed to Britain's relationship with the oil-rich kingdom, a move that drew sharp criticism from many quarters.
In June, the US Department of Justice started an investigation into BAE's compliance with anti-bribery laws, including its dealings with Saudi Arabia.
British defence firms have targeted the United States in recent years, keen to tap the world's largest defence budget and growing demand for equipment from the Department of Homeland Security.
To that end, BAE bought Armor Holdings and United Defense Industries. Its US unit is now treated by Washington as if it were an American company.
BAE shares closed 6p, or 1.2%, higher at 478p.
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