BAE Systems has reported a £10bn rise in orders since the end of June.
The defence giant, which has bases across the UK, said in its latest trading update it is on track for a double-digit jump in annual earnings as countries increase military spending amid the conflict in Gaza and Russia’s war in Ukraine.
The group, upped its earnings guidance in August after orders soared following Russia’s invasion of Ukraine last year, forecasting earnings per share would grow by 10% to 12% in 2023 and that sales would rise by between 5% and 7%.
Like this story? Why not sign up to get the latest South West business news straight to your inbox.
Since then, war has erupted following Hamas’s unprecedented October 7 surprise attack into Israel from the Gaza Strip. Israel has responded with air strikes on Gaza.
Charles Woodburn, BAE Systems chief executive, said: “Trading has been in line with the upgraded guidance we issued at the time of our 2023 half-year results. We are delivering another year of good sales and earnings growth, together with strong cash flow generation.
“Order flow on new and existing programmes, renewals on incumbent positions and progress with our opportunity pipeline remains strong. These underpin our confidence and visibility for good top line growth in the coming years, and we continue to reinforce our value compounding model with a sharp focus on operational performance and disciplined capital allocation.”
In October the defence giant said it was set to create more than 5,000 jobs after the Ministry of Defence awarded it £3.95bn of funding for the next phase of the UK’s nuclear-powered attack submarine programme, known as SSN-AUKUS.
BAE said: “This phase includes the detailed design of the submarine and long-lead procurement for the build phase over the coming decades.
“The award also paves the way for significant infrastructure expansion at our Barrow site together with investment in critical skills and the supply chain to support the wider submarine enterprise.”
BAE Systems was also awarded an £89m contract, in October, to enhance front-line connectivity for military personnel, linking small reconnaissance drones, combat vehicles, fighter jets, aircraft carriers and military commands.
The new five-year contract will see BAE Systems lead a consortium of trusted partners, including Kellogg, Brown and Root (KBR), PA Consulting and L3 Harris, to design and manufacture a deployable tactical Wide Area Network (WAN) known as ‘Trinity’. This will deliver a “highly-secure and state-of-the-art” battlefield internet capability to UK forces which is hoped will sustain battlefield awareness and intelligence sharing through a myriad of adversarial attacks.
Following today’s update, Aarin Chiekrie, an equity analyst at Hargreaves Lansdown, said: “With some of its biggest buyers, the UK, US and Europe, all expected to continue raising defence budgets over the coming years, the sky really is the limit for this jet-maker.”
He said the long-cycle nature of BAE’s orders have “given management the confidence to reiterate all recently upgraded full-year guidance, which is something of a novelty for most businesses in the current uncertain environment”.
The update comes after BAE Systems recently signed a $5.6bn (£4.6bn) deal to buy Ball Corporation – a company which supplies parts to the James Webb telescope and the US’s fighter jets.
Mr Chiekrie said: “The acquisition should add around 2.2 billion US dollars (£1.8bn) in revenue to BAE’s top line, before growing at a compound rate of around 10% annually over the next five years.
“And given the similarities between the two businesses, there’s clear scope to streamline operations, cut costs and boost profit margins.”
The group said it will announce its preliminary results for the year ending December 31, 2023 on February 21, 2024.
Original artice – https://business-live.co.uk/all-about/yorkshire-humber
