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BAE Systems poised for growth in 2021 with sales up to £19.3bn

BAE Systems confirms dividend payout for year at 23.7p

BAE Systems, the aerospace company, posted “strong” results on Thursday morning, announcing a 4% increase in sales over 2020, up to £21bn.

The company’s revenue rose to £19.3bn from £18.3bn, while operating profit climbed to £1.9bn. The underlying earnings per share is now at 46.8p.

BAE Systems announced a final dividend of 14.3p per share, bringing the total payout for the year up to 23.7p per share. This is down from a total dividend payout of 37.5p per share for 2019.

Despite a slight dip due to the pandemic, demand for defence has proved resilient, according to Neil Shah, director of research at Edison Group.

“Whilst the company reported a small drop in its recent orders compared to 2019, BAE Systems has indicated that its order backlog is already 80% full. And, boosted by 2020’s £1.7-billion acquisition of Ratheon’s Airborne Tactical Radios and Military GPS, the company expects that sales in its higher-margin air and electronic systems will continue to offset the disruption in its commercial aircraft business and provide sales and underlying profit growth of 3-5% and 6-8% respectively,” said Shah.

Shah’s outlook beyond Covid-19 is positive for BAE Systems, specifically as a proposition for investors. 

“Consequently, BAE systems appears to be poised for appreciable growth as the global economy returns to some sense of normality post-Covid, and, after a bleak year for traditional UK equity income strategies, the stock should be an especially attractive proposition for investors looking for secure dividend pay-outs.”

BAE Systems’ share price is up by 0.93% to 500.6p since Thursday’s open. Year-to-date the company’s share value is up marginally from 493.9p per share. 

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Charles Woodburn, chief executive at BAE Systems, commented on the groups results:

“Thanks to the outstanding efforts of our employees and close cooperation with our customers, suppliers and trades unions, we have delivered a strong set of results against a challenging backdrop of the global pandemic. Throughout 2020, we focused on keeping our people safe and supporting our communities, whilst continuing to deliver for our customers,” Woodburn said. 

“In 2021, we will continue to drive operational performance, progress our sustainability agenda and invest in high-end discriminating technologies to meet our customers’ priorities, which will ensure we are well positioned to grow the business and contribute to the economic prosperity of the countries in which we operate.”

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