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McAleese & Associates: BAE’s US Electronic Systems Business Posted 11% Sales Growth in First Half of 2019

Jim McAleese

A report by consulting firm McAleese & Associates says BAE Systems’ U.S. electronic systems sector saw its sales climb 11 percent to $2.8B during the first half of 2019 with a 14.8 percent operating margin and sector profit of $409M.

Jim McAleese, founder and principal at McAleese & Associates and a 2019 Wash100 winner, wrote that BAE’s U.S. platforms and services segment reported a 4 percent sales growth and a profit spike of 127 percent. Operating within the segment is the U.S. ship repair business, which posted $427M in total backlog.

BAE CEO Charles Woodburn provided updates on the M109 Paladin production. “We are making slow, but steady progress on [M109] Paladin, remaining on track to achieve production of eight vehicles per month by year end,” he said during the results call.

Jerry DeMuro, president and CEO of BAE’s U.S. arm and a 2019 Wash100 winner, discussed the U.S. Army’s Optionally Manned Fighting Vehicle program and the company’s efforts to compete for Mobile Protected Firepower, Robotic Combat Vehicle-Heavy and Robotic Combat Vehicle-Medium initiatives.

“With respect to OMFV, it is one of…five programs that make up the Army’s Next Generation Combat Vehicle Program. We are participating currently in three … Mobile Protected Firepower. We are heavily engaged and investing in the Robotic Combat Vehicle, both the medium and heavy…OMFV, when we looked at the requirements, the investments, and the [Section 804] acquisition model, we thought the best opportunities for us were the MPF and robotic areas, as well as focusing on the backlog that we have…and [Armored Multi-Purpose Vehicle] will also play a role…We will see how the OMFV program goes, there may be an opportunity to come back and engage in that a little bit later as well, given the acquisition model,” DeMuro said.

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