BAE Systems PLC (LON:BA.) saw its shares drop on Thursday after the defence firm warned that German opposition to a £10bn deal to sell Saudi Arabia Typhoon fighter jets will impact its financial performance in 2019 as it posted mixed 2018 results.
The FTSE 100-listed firm said it expected its underlying earnings per share in 2019 to only grow by a mid-single-digit compared to full-year 2018 underlying earnings per share of 42.9p which was almost flat on the previous year.
READ: BAE Systems reiterates forecast for flat 2018 earnings in anodyne trading update
BAE Systems said the current German government position on export licensing may affect the Group's ability to provide the capability to Saudi Arabia.
The group makes 16% of its annual sales from selling Typhoon fighter jets and other arms to Saudi Arabia.
For the year ending 31 December 2018, the group saw its sales fall by £100mln to £18.4bln as a reduction in Typhoon production activity offset growth in its US businesses.
The company’s underlying earnings (EBITA) in 2018 decreased by £46mln in 2018 to £1.92bn
Record order intake
However, BAE’s order intake over the year rose to a record of approximately £28.3bln, up from £20.3bln a year earlier.
The firm said 2019 sales are expected to be some 10% higher, reflecting activity on the new Qatar Typhoon and Hawk programme and the continued ramp-up on F‑35
Charles Woodburn, BAE’s chief executive said: "The defence order backlog is now at a record high with visibility on many of our key programmes through the next decade.
“Delivering a strong operational performance and continued investment will enable us to meet our growth expectations and underpin the long term."
In early morning trading, BAE shares were down 6.6% at 471p.