BAE Systems shares rose on Tuesday as the defence group revealed strong orders in the second half and said they reached a milestone with the delivery of four Typhoon Jets to Qatar.
BAE Systems said their guidance for the year remain unchanged on a constant currency basis, but saw a tailwind in currency fluctuates.
Free cash flow for the year is expected to be in excess of £1bn and underlying EBIT is expected to be 10-12% higher than last year.
BAE also noted a number of contract awards from the US since their interim results.
BAE Systems shares were up 2.5% at the time of writing. The defence is company is one of the FTSE 100’s top performers so far in 2022 as the invasion of Ukraine by Russia drives interest in defence shares.
Indeed, the UK Prime Minister yesterday said he would be placing orders for five battleships with BAE as he discussed global tensions at the G20.
“There are a few things that BAE is beholden to, and one of those is government defence budgets. We’ve learned today that many of the countries the defence giant operates in are upping their defence spending in response to the more threating geopolitical climate,” said Sophie Lund-Yates, Equity Analyst at Hargreaves Lansdown.
“This should feed into a sticky source of revenue for the group. New government contracts tend to be long-term in nature, giving BAE exceptional visibility over demand, which is hard to find in today’s uncertain environment. Since the half year the defence group has seen £10bn of order intakes and profits on a constant currency are expected to come in in-line with expectations.”