BAE Systems unveiled better-than-expected half-year profits yesterday.

The group, which employs about 900 people in the region, posted a 20.4 per cent rise in underlying earnings to £566m, higher than the £507m forecast by City analysts ahead of the results.

BAE employs 550 people at the former Alvis Vickers site, in Newcastle, with a further 350 in Birtley at the former Royal Ordnance factory site.

It said the figures reflected its work to eliminate risk and improve returns from its major programmes with the Ministry of Defence.

That area of work has proved a headache for BAE in the past, after work on Nimrod aircraft upgrades and Astute submarines faced budget wrangles with the MoD.

The programmes division, which works on projects such as the Eurofighter Typhoon, improved half-year earnings to £88m, up from the loss of £7m posted a year earlier.

The company also performed well in the US, as the £2bn acquisition in March of United Defence Industries gave BAE an "unrivalled transatlantic defence position".

The deal put the company on course to generate $8.5bn (£4.61bn) from the world's biggest defence market.

The company has a record order book worth £52.5bn, compared with £45.2bn at the same stage a year earlier.

Sales for the six months to June 30 were £6.77bn, against £5.96bn last time