BAE systems profits rise 6.1% in first half

BAE systems (LON:BA) today released its first-half year earnings insisting that the result of the EU Referendum will lead to a period of uncertainty but will not detrimentally impact operations in the immediate term.

The UK’s largest defence company reported that earnings rose 6.1% as sales increased by £2bn to £8.7bn as well as a rise in revenue for the defence giant growing 3% to £8.3bn.

As a result, underlying earnings increased to £849m equating to 17.4p per share from 17.1p per share at £800m in 2015.

BAE said the increase in earnings was marginally due to the weakening of the pound which meant that trades such as US dollar deals became increasingly more valuable and returned profitable growth.

The company’s interim dividend also increased by 2% to 8.6p per share

Chief Executive Ian King said:

“In the first half of 2016, BAE Systems performed well. Despite economic and political uncertainties, governments in our major markets continue to prioritise national security, with strong demand for our capabilities. In the US, we are seeing encouraging signs of a return to growth in defence budgets and improved prospects for our core franchises. In the UK, the result of the EU referendum will lead to a period of uncertainty, but we do not anticipate any material near-term trading impact on our business.

Our business benefits from a large order backlog, with established positions on long-term programmes in the US, UK, Saudi Arabia and Australia. We are well placed to maximise opportunities, deal with the challenges and continue to generate attractive shareholder returns.”

BAE systems has had to cope with numerous spending cuts in recent years, however ‘encouraging signs of growth’ can be found in a number of trade deals securing long term programmes with the US and with the recent renewal of Britain’s nuclear determent programme announcing that BAE systems will be the front runner in the £31bn campaign.

The company also announced that cyber security will become an increasingly important part of government security and as such, applied intelligence had a high demand in sales during the 6 months ending July 2016.

In reaction to the report, early morning trading in London saw shares in the company rise 1.1% in the first half hour of trading up 0.8% at 544p. BAE has so far valued at £17.3bn, a total growth of 8.9% so far this year.

At 10:05am BST BAE Systems plc traded at 545.00 +5.50 (1.02%)


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