BAE Systems, the UK’s largest defence contractor, has increased its financial forecasts for 2024 following strong performance in the first half of the year.
This comes even as the company faces uncertainties due to a UK defence review initiated by the new Labour government.
BAE Systems now expects its annual underlying earnings (EBIT) to grow by 12% to 14%, up from the previous guidance of 11% to 13%. The company also forecasts a 12% to 14% increase in sales, compared to the earlier prediction of 10% to 12%.
Chief Executive Charles Woodburn attributed the positive outlook to the efforts of the company’s employees and successful strategic initiatives. “Thanks to the outstanding efforts of our employees around the world, we delivered a strong operational and financial performance in the first half of the year, giving us confidence to increase our year-end guidance across all our key metrics. Working closely with our customers, we have maintained momentum on key strategic activities, including AUKUS and the Global Combat Air Programme,” said Woodburn.
BAE Systems reported a 13% increase in sales for the first half of 2024, reaching £13.4 billion, compared to £12 billion in the same period in 2023. Underlying EBIT also grew by 13% to £1.4 billion, driven by strong programme execution and efficiency initiatives.
The company raised its half-year dividend by 8%, reflecting its confidence in ongoing financial health. Shares in BAE, which have risen 17% this year, remained stable at 1,291 pence following the announcement.
In February, BAE completed the acquisition of US-based Ball Aerospace, now integrated into the company’s Space & Mission Systems business. This new division has already secured orders worth £0.7 billion.
Key operational milestones in the first half of the year include:
- The official naming of the sixth Astute-class submarine, Agamemnon.
- Delivery of two additional Typhoon fighter jets to Qatar.
- The unveiling of the Tempest next-generation combat aircraft concept model at the Farnborough International Airshow.
Financial Summary
For the first half of 2024, BAE Systems reported:
- Sales: £13.4 billion (up 13% from £12 billion in H1 2023)
- Underlying EBIT: £1.4 billion (up 13% from £1.3 billion in H1 2023)
- Order backlog: £74.1 billion (up from £69.8 billion at the end of 2023)
The company also successfully raised $4.8 billion (£3.8 billion) in debt finance, primarily to refinance the acquisition of Ball Aerospace.
Outlook
Looking ahead, BAE Systems has increased its full-year guidance:
- Sales growth of 12% to 14%
- Underlying EBIT growth of 12% to 14%
- Underlying earnings per share growth of 7% to 9%
- Free cash flow of over £1.5 billion for the year, with over £6.0 billion expected for the three-year period ending 2024
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Perhaps they could put a bit more cash into development rather than share dividends.
Like Tempest,Type 26 and Dreadnought to start with?
Well done Bae.
👍 BAES is a well connected and respected component of a growth industry. Impressive product catalog, increasing profits and wealth generation for stockholders and a consequential increased tax liability owed to multiple political masters (principally HMG and Uncle Sugar). Apparently a win-win proposition. 🤔
Yes they appeared a little sluggish in recent years but they seem to be a real growth stock of late and their US presence assures a serious profitable road ahead I think that European rivals find difficult to match.
I do hope so, my friend. Little bit of a roller coaster ride now and again but they invariably come good in the end. A lot of product that could find it’s way into U.K. forces if our political “masters” play ball. 🙂