Pre-tax profits surged more than a fifth as the British group benefited from rapid expansion in the United States, where it makes Bradley armoured fighting vehicles used by American forces in Iraq.

The annual results come as BAE Systems continues to face corruption allegations in the United States and Britain.

Net profit slid by 45 percent to 901 million pounds (1.19 billion euros, 1.75 billion dollars) in 2007 compared with the figure a year earlier, BAE Systems said in a results statement on Thursday.

But profit before tax, interest and amortisation jumped by 22.4 percent to 1.477 billion pounds, aided by growth from BAE's growing US businesses which now account for around half of total sales.

Revenues climbed 14.1 percent to 15.71 billion pounds last year.

The group gave a bullish outlook for 2008 thanks to recent US expansion and a Eurofighter contract signed recently with Saudi Arabia.

BAE also predicted that the US market would experience strong demand for sophisticated electronic warfare and protection systems in 2008.

"A further year of good growth is anticipated in 2008, including a full year contribution from the former Armor Holdings business," outgoing chief executive Mike Turner told reporters on a conference call.

BAE Systems bought US defence group Armor Holdings for 4.5 billion dollars in 2007.

The same month, the US Department of Justice launched an investigation into BAE Systems amid allegations the British arms maker paid bribes to secure contracts in Saudi Arabia in the 1980s.

BAE Systems is alleged to have set up a 60-million-pound "slush fund" for members of the Saudi royal family to secure business, and made illegal payments to those involved in its deals. BAE strenuously denies the charges.

The British government's chief legal adviser, attorney general Peter Goldsmith, announced in December 2006 that the investigation was to be discontinued "to safeguard national and international security".

But last week, campaigners launched a bid at London's High Court to persuade judges to quash the decision to abort the inquiry. The date of the ruling has yet to be confirmed.

Meanwhile BAE Systems is looking to appoint a new chief executive as Turner steps down later this year. His retirement after six years in the job is not being linked by the company to BAE's legal problems.

"This is my last full year but ... the company is in excellent shape going forward, Turner said on Thursday.

Under his watch, BAE sold its 20-percent stake in Airbus for 1.212 billion pounds in 2006, handing full ownership of Airbus to the European Aeronautics Defence and Space Company (EADS).

Last September, meanwhile, Saudi Arabia announced that it had signed a 4.43-billion-pound deal to buy 72 Eurofighter planes, after tortuous negotiations on one of the largest ever British export orders.

The Eurofighter was developed by a consortium of European defence companies that comprise BAE Systems, EADS and Italy's Alenia/Finmeccanica.

"Saudi Arabia continues to be an important home market for BAE Systems, building on a performance track record established over many decades," the British company added on Thursday.

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