BAE Systems earnings beat guidance, sees further growth

FILE PHOTO: Trade visitors walk past an advertisement for BAE Systems at Farnborough International Airshow in Farnborough, Britain, July 17, 2018. REUTERS/Toby Melville/File Photo

By Sarah Young

LONDON (Reuters) -Britain’s BAE Systems posted a 14% jump in annual earnings, beating guidance, and said it expected further growth in 2024 as government orders for defence equipment surge due to rising geopolitical tensions.

Underlying earnings per share at the country’s biggest defence contractor came in at 63.2 pence, compared with a consensus forecast of 62.5 pence, and its guidance of a 10-12% rise.

The company, whose biggest customers are the United States, Britain, Saudi Arabia and Australia, recorded sales of 25.3 billion pounds ($31.9 billion) last year, up 9% on 2022, as the Ukraine war continues to drive demand for military kit.

Chief Executive Charles Woodburn said the performance, combined with record order intake, positioned BAE for sustained growth in the coming years.

“Instability in Europe, the Middle East and other parts of the world brings into sharp focus the vital role that we play in protecting national security,” he told reporters on Wednesday.

“While most of our order volume was driven by existing programme positions that predate the Ukraine conflict, orders to restock and upgrade heavy armour and munitions are starting to come through,” he said.

BAE, which makes submarines and Typhoon fighter jets, said it expected earnings per share to grow by 6% to 8% this year on sales which are forecast to rise 10% to 12%.

Weapons, ammunition and equipment have been in strong demand since 2022 as BAE’s government customers provide support to Ukraine and replenish their own stocks. BAE’s shares have more than doubled since the start of the war.

BAE said its forecasts for 2024 included the $5.55 billion acquisition of Ball Aerospace, which completed earlier this month. The deal will boost its exposure to the U.S. market and the satellite and space sector.

BAE increased its annual dividend by 11%.

($1 = 0.7923 pounds)

(Reporting by Sarah Young, editing by Paul Sandle)