More than pounds 1bn was wiped off the value of British defence company
The warning wiped more than 8% off BAE's share price, reducing the company's market value by pounds 1.1bn to pounds 12.9bn.
The arms maker has already suffered from government cuts, with pre-tax profits down 65% last year to pounds 422m, though sales were 2% higher at pounds 18.2bn.
"As western governments withdraw their military assets and needs from deployments in
BAE's warning comes a week after jet engine maker
"Overall, the group delivered a solid performance in 2013, against the background of reduced government spending and challenging market conditions."
The company, which employs more than 88,000 people worldwide, said its order backlog was worth pounds 42.7bn over the medium term.
On Wednesday BAE agreed a deal on the price of 72 Eurofighter Typhoon jets it is selling to Saudi Arabia following years of negotiations. King said the public is "never going to know" how much the Saudis are paying for the jets, which initially had a pounds 4.4bn price tag. BAE had been trying to extract more money after the Saudis requested advanced weaponry and equipment for the jets, which are being built in Warton, Lancashire. The first part of the "cash settlement" is expected in the next few months.
He said the Gulf had become an increasingly important market for the Typhoons. More than 390 of the jets - which are built in conjunction with European aerospace group
As well as maintaining the jets in the future, King said BAE will continue to supply
The company is also benefiting from the growing threat from cyber terrorism and cyber crime. "Cyber is growing from both government and commercial activities," he said. BAE has won a five-year contract to protect
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