BAE Systems provides third-quarter reassurances as Saudi talks progress

BAE Systems reiterated its confidence about hitting full year targets and gave encouraging platitudes about ongoing long-term contracts, including the government's politically sensitive talks about the next defence export contract with Saudi Arabia.

Trading for the period has been consistent with management expectations and the group's outlook for 2016 remains unchanged," the company said in a trading statement covering the third quarter of the year, pointing to between 5-10% growth in underlying earnings per share.

The defence giant reported "good progress" on talks with the UK Ministry of Defence and continuing government support for export activity, expressed optimism about winning further orders for the Typhoon fighter jet, and said the US defence market outlook remains "positive" with no material disruption expected in the near term.

BAE, which secured a 10-year Typhoon supply agreement in July, said it had secured £1.3bn of funding to pay for the Successor submarine contract, with contracts for a new Royal Navy frigate design and an offshore patrol vessel nearing completion.

Talks with the Saudis over the size of the next five-year were said to be "progressing".

In the US, production has started to ramp up on a number of its long term programmes, as expected, with extra dry dock capacity at San Diego's ship repair business on track to be up and running early next year.

A sixth ship was delivered under a commercial shipbuilding contract, with two remaining ships scheduled for completion in 2017.

BAE confirmed that its interim dividend of 8.6p per share will be paid on 30 November.