BAE Systems has experienced demand consistent with heightened geopolitical nervousness and is set to deliver ‘another year of good sales and earnings growth, together with strong cash flow generation.’
The group maintained revenue growth guidance at 5%-7% as customers in the West continued to bolster their defence capabilities.
The UK-based company said it had enjoyed orders of around £10bn since the beginning of the half year, including a UK submarine contract, Bradley tank awards and artillery orders. Orders for the full year stand in the region of £30bn.
In addition, BAE has built up a large order backlog that provides them with a base for future growth.
“BAE occupies a key space in the defence market, and another promising update proves why the group’s so highly regarded in the defence space. 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,” said Aarin Chiekrie, equity analyst at Hargreaves Lansdown.
“Given the elevated threat environment, demand for BAE’s products and services has remained strong with around £10bn of order intakes since the half-year mark. That takes the year-to-date figure up to around £30bn, and because these are typically long-cycle orders, with payments spread over several years, it gives BAE multi-year revenue visibility. That’s 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.”
When Russia invaded Ukraine early last year, BAE Systems shares soared and have since comfortably settled into trading ranges above 1,000p.
BAE Systems shares ticked 0.8% higher in early trade on Monday to trade at 1,111p.
BAE Systems will release preliminary results for the full year 21st February.
