LONDON (Reuters) - BAE Systems (L:BAES), the world's third-largest defence contractor by revenue, stood by its forecast for marginally higher earnings this year and added its performance would be biased to the second half.
The update from BAE, which helps build the Eurofighter Typhoon jet, supplies the Royal Navy with ships and produces combat vehicles for the U.S. Army, comes on election day in Britain, where the company makes about a quarter of its sales.
Prime Minister David Cameron's Conservatives and Ed Miliband's opposition Labour Party have been neck and neck in opinion polls for months, indicating neither will win enough seats for an outright majority in the 650-seat parliament.
Whichever government is formed is due to hold a review of defence and security spending later this year, which will shape the military budget over the next five years, potentially impacting BAE's sales in its home market.
Over the last four years, Britain has cut defence spending by around 8 percent in real terms to help reduce its record budget deficit, and further cuts have not been ruled out.
For 2015, though, BAE said excluding the impact of currency moves it was maintaining a forecast given in February for earnings per share to be marginally higher this year, guidance which partly relies on anticipated new orders for naval equipment and aircraft.
"Our business is making good progress in 2015," Chief Executive Ian King said in a statement ahead of the company's annual shareholders' meeting on Thursday.
Shares in BAE traded down 0.9 percent to 496 pence at 0727 GMT, broadly in line with Britain's blue chip FTSE 100 index (FTSE) which was 0.7 percent lower.
"We would take the view that no news is good news," said RBC analyst Robert Stallard. "There have been no execution issues year to date and BAE has continued to secure decent contract awards."