"Exceptionally strong operation cash performance in the second half of the year helped to sharply reduce the net debt," Commerzbank analyst Will Mackie told Reuters.
Chief Executive Mike Turner said on Thursday that BAE was determined to avoid any repeat of its experiences with the Astute attack class submarine and Nimrod MRA4 maritime patrol aircraft programmes and the company would not expose its shareholders to such pricing risks on future contracts or programmes.
The company said it made an operating profit before goodwill amortisation, impairment costs and exceptional items of 980 million pounds ($1.9 billion) in 2003. Underlying earnings per share of 16.6 pence came in at the top end of analyst forecasts.