Europe's biggest defence contractor BAE Systems
Revenues fell 14 percent to 19.15 billion pounds after the U.S. army cut supply orders following its pullout from Iraq and after the delay of an order for 72 Eurofighter Typhoon jets by Saudi Arabia.
It's a difficult market as defence spending reduces in our largest markets, the U.S. and UK, Chief executive Ian King told reporters on Thursday, adding that little sales growth can be expected for the group in 2012.
BAE, which is involved in the production of F-35 fighter jets and Astute class submarines Systems, posted underlying earnings before interest, tax and amortisation (EBITA) of 2.02 billion pounds for the year to the end of December 2011, slightly above expectations.
It had been expected to post 2011 EBITA of between 1.44 billion and 2.15 billion pounds, with the average at 1.9 billion pounds, according to a Thomson Reuters poll of 18 analysts.
The company increased the total dividend 7.4 percent to 18.8 pence but said the outlook was uncertain.
Shares in BAE, which have fallen 6 percent in the last year, were 3.4 percent down at 321.7 pence by 0840 GMT.
BAE are forecasting flat 2012 sales and with the difficult market backdrop it looks like it will be a long, hard slog ahead for the company, said Societe Generale analyst Zafar Khan.
BAE, which derives 47 percent of its revenues from the U.S. and 29 percent from Britain, has been hit by cuts to military spending as governments look to reduce their debts.
The U.S. capped its military budget at last year's levels for 2012, while Britain wants to cut defence spending by 8 percent over the next four years - a move expected to disrupt its procurement plans.
BAE, whose Eurofighter consortium failed to win a deal to supply the jets to India recently, said it could reduce the price of the jets on offer to get back into the running.
Discussions with partners continue and that includes all options ... we won't bid anything at stupid margins, said King.
The company is targeting growth in the Gulf and South America to offset the possibility of a continued slump in its main markets.
Interest in Typhoon remains high and we have good prospects on deals with Oman, Malaysia, Qatar and the UAE as well as the Brazilian navy, added King.
The British arms maker last year launched a review into its shipbuilding operations, which could lead to the closure of one or more of its British dockyards. It cut 3,000 jobs in the UK last year, having shed more than 15,000 positions globally over the previous two years.
(Editing by Matt Scuffham and Jodie Ginsberg)