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HOTSTOCK-European defence firms take heart from U.S. budget
Tue, 7th Apr 2009 10:12
By John Bowker
LONDON, April 7 (Reuters) - European defence company shares were broadly higher on Tuesday as the new United States Defence budget proposed more funding for the F-35 joint strike fighter jet, partly built in the UK.
The U.S. defence budget plan for 2010, which still has to be approved by Congress, cut missile defence and weapons programmes but would boost F-35 procurement to $11.2 billion next year from $6.8 billion.
Britain's BAE Systems, responsible for around 20 percent of the jet, soared 7 percent to 352 pence by 0832 GMT -- by far the highest gainer on the FTSE 100 index and almost halving losses in the year to date.
It also out-performed the overall UK aerospace and defence index overall, which was up 4 percent.
'BAE is clearly a winner -- F-35 is a big programme for the company,' said Societe Generale analyst Zafar Khan, adding that the boost would more than off-set BAE's exposure to the army's Future Combat Systems (FCS) ground programme, which was cut back..
Cobham, whose electronics equipment helps F-35s communicate with one another, was up 4 percent -- outperforming a 0.4 percent gain in the FTSE 100.
Evolution analyst Nick Cunningham said that while Cobham was also exposed to the U.S. missile defence programme through last year's $400 million acquisition of unlisted Sparta, the F-35 news would dominate.
'Rolls Royce and Ultra Electronics should also benefit as sentiment spreads across the board,' he said.
Engine maker Rolls, which has more exposure to the civil sector than military, was up 1 percent while Ultra shot up 1.6 percent.
But in Italy, Finmeccanica suffered the expected loss of the new $13 billion presidential helicopter it was building with Lockheed Martin.
The programme had doubled in cost and was more than six years behind schedule. Finmeccanica
shares were down nearly 2 percent.
Numis analyst Andrew Gollan said defence companies, in the UK at least, would 'breathe a sigh of relief'.
'No surprises in announced programme cuts and there is a commitment to more efficient contracting,' he said.
British firms warned last week that cuts to defence budgets to help boost the economy would be counter-productive
(Reporting by John Bowker; Editing by Erica Billingham) Keywords: DEFENCE EUROPE/
(john.bowker@reuters.com;+44 207 542 8454 Reuters Messaging: john.bowker.reuters.com@reuters.net)
COPYRIGHT
Copyright Thomson Reuters 2009. All rights reserved.
The copying, republication or redistribution of Reuters News Content, including by framing or similar means, is expressly prohibited without the prior written consent of Thomson Reuters.
LONDON, April 7 (Reuters) - European defence company shares were broadly higher on Tuesday as the new United States Defence budget proposed more funding for the F-35 joint strike fighter jet, partly built in the UK.
The U.S. defence budget plan for 2010, which still has to be approved by Congress, cut missile defence and weapons programmes but would boost F-35 procurement to $11.2 billion next year from $6.8 billion.
Britain's BAE Systems, responsible for around 20 percent of the jet, soared 7 percent to 352 pence by 0832 GMT -- by far the highest gainer on the FTSE 100 index and almost halving losses in the year to date.
It also out-performed the overall UK aerospace and defence index overall, which was up 4 percent.
'BAE is clearly a winner -- F-35 is a big programme for the company,' said Societe Generale analyst Zafar Khan, adding that the boost would more than off-set BAE's exposure to the army's Future Combat Systems (FCS) ground programme, which was cut back..
Cobham, whose electronics equipment helps F-35s communicate with one another, was up 4 percent -- outperforming a 0.4 percent gain in the FTSE 100.
Evolution analyst Nick Cunningham said that while Cobham was also exposed to the U.S. missile defence programme through last year's $400 million acquisition of unlisted Sparta, the F-35 news would dominate.
'Rolls Royce and Ultra Electronics should also benefit as sentiment spreads across the board,' he said.
Engine maker Rolls, which has more exposure to the civil sector than military, was up 1 percent while Ultra shot up 1.6 percent.
But in Italy, Finmeccanica suffered the expected loss of the new $13 billion presidential helicopter it was building with Lockheed Martin.
The programme had doubled in cost and was more than six years behind schedule. Finmeccanica
Numis analyst Andrew Gollan said defence companies, in the UK at least, would 'breathe a sigh of relief'.
'No surprises in announced programme cuts and there is a commitment to more efficient contracting,' he said.
British firms warned last week that cuts to defence budgets to help boost the economy would be counter-productive
(Reporting by John Bowker; Editing by Erica Billingham) Keywords: DEFENCE EUROPE/
(john.bowker@reuters.com;+44 207 542 8454 Reuters Messaging: john.bowker.reuters.com@reuters.net)
COPYRIGHT
Copyright Thomson Reuters 2009. All rights reserved.
The copying, republication or redistribution of Reuters News Content, including by framing or similar means, is expressly prohibited without the prior written consent of Thomson Reuters.
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