BAE Systems Forecasts High as Defence Orders Surge

The United Kingdom’s biggest defence company and Europe’s top weapons contractor BAE Systems increased its earnings guidance for 2023 to growth of 10%-12%, citing increased global uncertainty had driven military equipment orders to a record level.

It was reported that shares in the company jumped 4.9% to 979 pence on the announcement. The stock has risen 19% over the last 12 months.

BAE Systems said its strong operational performance plus demand from its customers – the biggest of which in order of size are the United States, Britain, Saudi Arabia and Australia – meant its full-year results would be better than expected across the board.

Since Russia invaded Ukraine in February last year, demand for weapons, ammunition and equipment has soared as western allies support Ukraine and increase their own stocks, while in the Asia-Pacific region, growing threats are also driving defence spending.

Chief Executive Charles Woodburn said BAE’s broad spread was key to its growth, highlighting its provision of defence across the air, sea, land, space and cyber theatres of war. The company was well-positioned to deliver sustained growth in the coming years, he added, with a record order backlog of £66.2 billion ($84.5 billion).

“We’ve delivered a strong financial performance in the first half of the year…Our global footprint, deep customer relationships and leading technologies enable us to effectively support the national security requirements and multi-domain ambitions of our government customers in an increasingly uncertain world,” a company statement said.

For 2023, BAE said earnings per share would grow 10%-12%, compared to the 5%-7% increase it had forecast in February, while it also lifted sales guidance to 5%-7% growth from 3%-5%.

Recently, the UK is ramping up its munitions manufacturing with a deal between the Ministry of Defence and BAE Systems to supply 155mm artillery shells and other ammunition.

The order is worth £280 million ($361 million) initially, with options that would increase the value of the deal to more than £400 million, the MoD said in a statement July 11. –bae/adj/mgm (Pix:BAE)