LONDON (AP) -- BAE Systems PLC, Europe's biggest military contractor, forecast robust growth in 2009 as it posted a a 93 percent jump in net earnings for 2008 on the back of sending ammunition and armored vehicles to war zones.
BAE said it has a strong order book for the coming year, despite a lower level of land vehicle sales, and the company should benefit from the continued weakness of the British pound against the U.S. dollar.
The British-based company, the world's third-largest defense company, reported a net profit of 1.75 billion pounds ($2.5 billion) for 2008, up from 901 million pounds in 2007. Revenue rose 16.5 percent to 16.67 billion pounds.
The order book grew by 20 percent to 46.5 billion pound, helped by a 15-year munitions contract with the British military and further orders for land vehicles from the U.S. military.
BAE recently bolstered its exposure to the United States with the acquisition of Armor Holdings, a major supplier of equipment, including Humvee vehicles, to the military and security forces.
U.S. President Barack Obama's announcement this week to send more troops to Afghanistan will likely boost demand for the company's armored trucks, but analysts widely expect government defense spending to reduce as the economic downturn impinges on their income from taxes.
BAE is moving to address that potential hole by increasing its business in intelligence, security and aerospace.
"We have a clear long term strategy to develop the group in the defence, security and aerospace sectors," said Chief Executive Ian King.
Keith Bowman, an analyst at Hargreaves Lansdown Stockbrokers, said that the expected reduction in defense budgets and concerns about a 2.1 billion pound deficit in the company's staff pension fund position were negatives.
"Nonetheless, for now, given progress to date and the group's perceived defensive qualities in uncertain times, analysts continue to assess the company positively, with the current market consensus opinion remaining firmly in buy territory," he said.
BAE shares rose 4 percent to 401.75 pence in early trading on the London Stock Exchange.