BAE lifts 2008 outlook on demand for armoured cars

By Mark Potter

LONDON (Reuters) - BAE Systems, Europe's biggest defence company, lifted 2008 earnings expectations on Friday as it beat first-half forecasts, boosted by strong demand for armoured vehicles for war zones in Iraq and Afghanistan.

The firm said earnings before interest, tax and amortisation (EBITA) leapt 26 percent to 881 million pounds in the six months to June 30.

Excluding a 61 million pound profit on the disposal of its surveillance and attack business, this beat analysts' average forecast of 796 million pounds, according to a company poll.

However, a 12 percent rise in sales to 7.75 billion pounds was below some analysts' forecasts, held back by a 19 percent drop in sales at the firm's Programmes & Support business due to a transition on its Typhoon fighter jets programme.

Chief Executive Mike Turner, who will be succeeded by Chief Operating Officer Ian King next month, said demand was driven by a 29.5 percent rise in sales, excluding acquisitions, of armoured cars -- particularly mine-resistant ambush-protected (MRAP) vehicles.

"We have a lot of long-term business in that sector, but clearly we are benefiting from current operations in Iraq and Afghanistan," he told reporters.

BAE, the world's third-biggest defence company, said its order book stood at a record 41.1 billion pounds, up from 31.7 billion the same time last year, and Finance Director George Rose expected analysts to lift their 2008 profit forecasts.

Analysts are currently forecasting BAE to report full-year EBITA of 1.76 billion pounds, according to a company poll.