Military spending cuts have led to a drop in profits at UK defence company BAE Systems.
Profits before tax for the first six months of the year were £691m, down from £781m a year ago.The results came on the back of a 13% cut in global sales to £9.2bn.
BAE benefited from a one off payment of £125m from the UK Ministry of Defence in compensation for cancelled contracts - including the new Nimrod surveillance jet programme.
BAE also took a one off loss of £160m linked to a contract to provide an Omani patrol vessel.
Despite the lower profits, the company announced that it was raising its dividend by 7% and purchasing £500m of its own shares.
The buyback was well received by investors, with BAE shares up by 4.1% by mid morning.
Chief executive Ian King said the company would focus on new areas of business such as cyber weapons.
"We continue top pursue the fast lanes of growth in the areas of military and technical services, cyber and intelligence and high-end electronics," he said.
Analysts said the results were not as bad as they could have been given the spending cuts.
"These results are by no means a disaster, and the increased shareholder returns should be taken as a positive," said Andrew Gollan from Investec Securities.
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