LONDON (Reuters) - Britain's biggest defence company BAE Systems (L:BAES) stuck to its forecast for flat earnings this year, saying that some issues at U.S. projects and in its maritime unit would be offset by a stronger performance from other parts of the business.

BAE, which is building Britain's new nuclear submarines, manufactures Eurofighter Typhoon jets and provides electronics for the F-35 combat jet, posted a 2 percent drop in underlying earnings per share to 19.8 pence for the half year period.

For the full-year it is aiming to match the 43.5 pence it made in 2017, and it said it was on course to do so, adding that it expected to see some additional benefit from exchange translation.

The company, which won a $26 billion (£19.83 billion) contract to build war ships for Australia in June, signalled its confidence by lifting its interim dividend by 2 percent to 9 pence per share.

"With a large order book and a positive outlook for defence budgets in a number of key markets, we have a strong foundation to deliver growth and sustainable cash flow," Chief Executive Charles Woodburn said in a statement on Wednesday.

The company said higher earnings from its electronic systems unit, which provides equipment for combat jets like engine controls, surveillance and night vision systems, and its cyber and intelligence business would offset problems elsewhere.


Those issues included extra costs on a programme to deliver five patrol vessels for Britain, and challenges with a subcontractor in factories that make equipment for the U.S. Army. BAE said it had taken steps to address these issues.