Slightly higher profit headwind from covid-19 than we expected BAE expects broadly flat sales in H1 2020. This is consistent with our view of small underlying growth offset by headwinds from US commercial electronics, some programs impacted by supplier issues (ACV), and moderate productivity difficulties in long cycle business (international Air programs, Maritime, MBDA). BAE expects a c.15% decrease in EBITA in H1 (we had -5%, consensus -6%). This is mostly driven by extra costs from covid-19 and productivity headwinds (no furlough of personnel in the UK) and unfavourable mix effects (pressure on high margin civil avionics business, with USD900m annual sales). We think it may also reflect accounting headwinds, due to slow progress on programs accounted at percentage-of-completion. H1 operating cash outflow (pre-pension top up and acquisitions) is expected to be similar to previous years (GBP-574m in 2019), with limited covid-19 impact. Fundamentals remain intact, and situation should quickly normalize into Q3 BAE is hopeful that the covid-19 impact will be broadly contained to Q2: actions have been taken to build resilience in operations, c.90% of workers are operational either on site or remote, and only moderate impact from supply chain ripple is expected through in Q3-Q4. Underlying organic performance seems fine, and demand and orders are holding up in line with management expectations. An update on dividend policy will be made with the H1 release (likely to confirm final 2019 dividend payment in our view). Forecasts cut on higher one-off costs and our more cautious view on commercial avionics BAE has not yet provided any FY guidance, but we suspect consensus is likely to trim expectations for slightly higher one-off costs from covid-related operating disruptions. This is reflected in our EPS and cash flow cuts. We have also taken a more cautious view on the sustainability of pressures in commercial avionics, underpinning our c.6% EPS...