Troops in Afghanistan will go home in 2014 when BAE’s last Type 45 destroyer for the Royal Navy is also due to set sail.
Weak prospects for a “big win” to offset slowdowns in such programmes are worries for both the company and investors, and analysts agree a upgrading a contract on Typhoon fighter jets for Saudi Arabia must now be at the top of BAE’s to-do list.
“BAE really needs the cash from renegotiating Typhoon pricing with Saudi Arabia. Without it total gearing remains high to 2015 (and) we see a decreased possibility of share buybacks,” said analyst Sash Tusa at Echelon Research and Advisory.
The deal is worth more than 7 billion pounds and analysts estimate as much as 600 million pounds in cash this year.
Without it, dividends that have grown by 10 percent a year could be in trouble in the near future. Even with it, growth hopes are modest.
CEO King highlighted the programme, and a campaign to sell warplanes to Oman, on a call with reporters on Wednesday.
“We have real key prospects in Saudi, in Oman and in other territories,” King said, while Chairman Dick Olver said current dividend plans remain unchanged.
But beyond 2012 some see trouble. Bank of America analysts on Thursday cut estimates on BAE’s stock price and the dividends it is likely to deliver in 2013 and 2014.