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		</div><p><a href="http://londonglossy.com/wp-content/uploads/2011/02/bae-cautious-as-cost-cuts-bite.jpg"><img class="alignnone size-full" title="An unwanted Nimrod aircraft lies at a BAE base as the company warned sales are likely to fall this year" src="http://londonglossy.com/wp-content/uploads/2011/02/min-bae-cautious-as-cost-cuts-bite.jpg" alt="An unwanted Nimrod aircraft lies at a BAE base as the company warned sales are likely to fall this year"/></a></p>
<p>Defence and security giant BAE Systems has warned sales are likely to fall this year as it bears the brunt of spending cuts in the UK and United States.</p>
<p>The group saw a small rise in underlying earnings to £2.2 billion last year but offered a cautious tone on prospects, particularly as it continues to grapple with the implications of October&#8217;s UK defence spending review.</p>
<p>With government customers looking for cost savings, BAE has cut more than 15,000 jobs over the last two years in order to boost competitiveness.</p>
<p>In the United States, BAE said the defence and security markets continue to generate a number of opportunities despite budgetary pressures. And in India, where BAE is working to boost its presence, defence spending is expected to grow substantially, according to the company.</p>
<p>Overall sales rose 2% to £22.4 billion last year, while earnings were up due to growth in its division providing electronic systems for the US military.</p>
<p>However, its land and armaments division saw sales fall by 12% to £5.9 billion and earnings remain flat at £604 million as the division responsible for the design and production of armoured combat vehicles, naval guns and missile systems suffered due to pressure on defence budgets.</p>
<p>BAE reduced staff and contractor headcount in the division by 5,500 last year and said it expects pressure on the business to continue this year.</p>
<p>It added: &#8220;Going forward, the focus will be on securing key new programmes, pursuing export opportunities, and sustaining the margin improvement from the business&#8217;s ongoing restructuring and efficiency initiatives.&#8221;</p>
<p>In the company&#8217;s programmes and support division, which employs 31,600 people and comprises BAE&#8217;s UK-based air, maritime and cyber intelligence activities, 2010 sales were flat on a like-for-like basis at £6.7 billion. Earnings were down 21% at £529 million, partly due to a charge for a terminated programme.</p>
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