(Adds context on Typhoon deal)
LONDON, May 9 (Reuters) - Leading British defence firm BAE Systems said it was working with the government to deliver its contracts with Saudi Arabia after Germany extended its ban on exporting arms to the country.
Reflecting the Saudi situation, Britain’s biggest defence company noted that it remained subject to geopolitical uncertainties as it reiterated its earnings targets for the year.
In March, Germany said it would extend for a further six months a ban on exporting arms to Saudi Arabia which has strained ties with fellow European arms exporters with whom German companies have joint programmes.
The ban, imposed after the killing of Saudi journalist Jamal Khashoggi, has been criticised by European allies since it put a question mark over billions of euros of military orders, including a multi-billion pound deal to sell 48 Eurofighter Typhoon jets to Riyadh that would be led by Britain’s BAE Systems.
The deal, confirmed in a memorandum of understanding last year, has not been finalised, and is not reflected in BAE’s 2018 financial statements.
Germany is part of the consortium that builds the Eurofighter Typhoon, a fighter jet that BAE has sold to Saudi Arabia, through Airbus and MTU Aero Engines.
“Following the recent updates from the German Government regarding export licences, we are working closely with industry partners and the UK government to continue to fulfil our contractual support arrangements in Saudi Arabia on the key European collaboration programmes,” BAE said on Thursday.
In February, BAE warned that Germany’s stance on Saudi could damage its major deals with the country and weigh on its financial performance.
BAE said that its guidance of mid-single digit growth in underlying earnings per share and a slight increase in net debt this year was unchanged from February, after it started the year by trading in line with expectations.
The company said that U.S. President Donald Trump’s 2019 budget and his fiscal proposals for 2020 maintained a “positive momentum” for military funding. (Reporting by Alistair Smout, Editing by Paul Sandle and Elaine Hardcastle)