BAE Systems bags US Army contract worth up to $1.2bn

Britain's BAE Systems, the largest defense company in Europe, has bagged a contract worth up to $1.2bn to build a new type of armoured vehicle for the US Army.

BAE said the programme aims to engineer and produce a limited number of the vehicles to begin with, to replace the Vietnam War-era M113 armoured personnel carriers (APCs).

The firm's stock was trading 0.25% higher to 474.49p at 0922 GMT in London.

BAE said in a statement: "The initial award is for a 52-month base term, valued at approximately $383m, during which BAE Systems will produce 29 vehicles - called the Armored Multi-Purpose Vehicle (AMPV) - across each of the variants.

"The award also provides an option to begin the LRIP phase immediately following the current EMD phase, at which time the company would produce an additional 289 vehicles for a total contract value of $1.2bn [£773m, €984m]."

The statement added: "The AMPV capitalises on proven Bradley and M109A7 designs, meeting the [US] Army's force protection and all-terrain mobility requirements while enabling the AMPV to maneuver with the rest of the Armored Brigade Combat Team (ABCT).

"The BAE Systems AMPV team includes DRS Technologies, Northrop Grumman Corporation, Air Methods Corporation, and Red River Army Depot. Work on the contract is expected to begin immediately and will take place primarily at the company's York, Pennsylvania, and Sterling Heights, Michigan, facilities."

Military drones

In November, the British and French governments signed a multimillion pound deal to develop military drones and the first formal step has led to contracts with six companies, including the UK's BAE for a two-year feasibility study.

The combat drone could be deployed from 2030.

Royal Navy deal

In October, BAE revealed that it had sealed a deal with the Royal Navy to support half of its surface fleet and run the naval base at Portsmouth for five years as part of a £600m contract.

BAE has 30,000 staff across the UK and market capitalisation of £14.96bn.

In July, BAE Systems reported a 7.5% tumble in half-year profit as the US cut back its military spending. It said that dwindling US military spend was not enough to offset growing demand from the Middle East and Asia, and subsequently posted earnings before interest, tax and amortisation (Ebita) of £802m.

However, it told investors that its outlook has remained unchanged for 2014.