BAE Systems sticks to forecast for flat earnings

LONDON (Reuters) - Britain's biggest defence company BAE Systems, which counts Saudi Arabia as its third biggest customer, stuck to a forecast for flat earnings in 2018 and said programmes in the UK and the United States were making progress.

BAE's update is its first since companies have come under pressure for doing business with Saudi Arabia in the wake of the killing of Saudi journalist Jamal Khashoggi in the Saudi consulate in Istanbul on Oct. 2.

BAE makes 16 percent of its annual sales from selling Eurofighter Typhoon fighter jets and other arms to Saudi Arabia. It did not mention Saudi in its trading statement.

"Whilst a degree of geopolitical turbulence exists, the potential pipeline for Typhoon remains positive with opportunities both with partner nations and through exports," the company said on Thursday.

Germany has pledged to suspend arms exports to Saudi Arabia over Khashoggi's killing.

The case has raised questions about the UK government's 10 billion pound deal to sell Saudi Arabia 48 new Typhoons, which are made by BAE Systems and its partners.

The deal, confirmed in a memorandum of understanding in March, has not been finalised, and is not reflected in BAE's 2018 financial statements.

BAE, which builds ships and fighter jets for the UK, and combat vehicles and other equipment for the United States, said that for 2018 earnings per share would be in line with the previous year, with some small additional benefit from exchange rates.

The company repeated a line it has given in the past that it saw limited impact on its business from Britain leaving the European Union as it had little trade with the EU.

(Reporting by Sarah Young; editing by Mark Potter and Jason Neely)