LONDON (AP) — Defense contractor BAE Systems cautioned about its U.S. outlook in presidential election year as it reported a slight dip in first-half profits.

The company said Thursday its outlook is clouded by uncertainties over defense spending in the United States ahead of November's election and pricing for Typhoon fighter aircraft ordered by Saudi Arabia.

For the six months ending June 30, BAE said sales were down from 9.2 billion pounds ($14.3 billion) last year to 8.3 billion pounds, primarily because there were no Typhoon deliveries to the Saudis in the period. The completion of deliveries of Gripen fighter deliveries to South Africa last year also impacted on this year's sales.

Net profit was 1 percent lower at 474 million pounds.

Despite its caution over the U.S. , the company reaffirmed previous guidance that it expects modest growth in underlying earnings this year.

Underlying earnings per share — excluding impairments, non-cash finance movements and one-time items — rose from 18.6 pence a year ago to 18.8 pence. BAE declared a 4 percent increase in its first-half dividend, to 7.8 pence.

BAE shares were down 1.9 percent at 306.5 pence in morning trading in London.

"Overall results are fine given the challenging environment, but we feel there is not quite enough here to materially drive the rating following the share's recent strong performance," said Andrew Gollan, analyst at Investec Securities.

The company's main hurdles ahead are likely to center on the U.S. and Saudi Arabia, both big buyers of BAE products.

"With U.S. government debt reduction measures to be determined and with presidential and Congressional elections in November, delay to the approval of fiscal year 2013 budgets is likely," the company said.

Regarding Saudi Arabia, BAE has a contract for final assembly of 48 Typhoons to complete an order 72, but negotiations are continuing on price.