BAE Systems has shared an optimistic market update, underscoring its robust performance and strategic growth.
Central to this update is the significant contribution of Scottish shipbuilding work to BAE’s financial strength.
Notably, the firm has secured an impressive order intake, with approximately £10 billion booked since the half-year update.
For the financial year 2023, BAE Systems maintains a positive outlook across key financial indicators. The guidance includes a projected sales increase of 5 to 7% from 2022’s £23,256 million, an underlying EBIT growth of 6 to 8% from £2,479 million in 2022, and an underlying EPS increase of 10 to 12% from 55.5p in 2022. The company also anticipates Free Cash Flow (FCF) to exceed £1.8 billion, a slight decrease from £1,950 million in 2022.
Highlighting the long-term nature of defence contracts, BAE Systems has secured significant deals, including a £3.9 billion funding for the SSN-AUKUS submarine programme. This funding, earmarked for development work until 2028, encompasses the detailed design and procurement for future build phases.
Additionally, the company has received multiple awards worth around $800 million for Bradley fighting vehicles and upgrades, as well as a $500 million contract for ARCHER artillery systems from Sweden.
BAE Systems’ commitment to investment and industrial collaborations is evident in its strategic growth plans. These include expanding UK submarine facilities, advancing a new shipbuilding facility in Glasgow, and enhancing munitions manufacturing capacity.
Leadership changes within BAE Systems have been announced, with Angus Cockburn joining the Board as a Non-Executive Director and Nicole Piasecki taking over from Chris Grigg as Senior Independent Director. The Executive Committee will also see new appointments following the retirement of long-serving members.
In their market update, BAE Systems states: “Trading has been in line with the upgraded guidance we issued at the time of our 2023 half-year results. We are delivering another year of good sales and earnings growth, together with strong cash flow generation.”
Charles Woodburn, Chief Executive of BAE Systems, further elaborates: “Order flow on new and existing programmes, renewals on incumbent positions and progress with our opportunity pipeline remains strong. These underpin our confidence and visibility for good top line growth in the coming years.”