BAE Systems hikes full-year outlook on military spending boost

Defence giant BAE Systems has upped its full-year earnings outlook after notching up a new record for orders as the war in Ukraine drives military spending higher.

Britain’s biggest defence company said it secured £21.1 billion of orders in the six months to June 30, taking its backlog of orders to a record high of £66.2 billion.

The firm – which builds ships, submarines and fighter jets – said it now expects annual underlying earnings growth of 6% to 8%, up from its previous forecast for 4% to 6%.

It also increased its guidance for full-year sales growth, to 5% to 7%, up from 3% to 5%.

Shares in the FTSE 100 listed firm lifted 5% in morning trading on Wednesday.

It said governments worldwide were facing an “increasingly uncertain world”, which is seeing them hike spending on military equipment.

BAE posted an 11% rise in half-year sales to £12 billion, while its underlying earnings rose by 10% to £1.3 billion.

Pre-tax profits for continuing operations jumped to £1.2 billion in the first half from £779 million a year earlier.

It announced an 11% increase in its interim dividend to 11.5p and in another boost for shareholders, the group unveiled another three-year share buyback programme worth £1.5 billion.

Charles Woodburn, chief executive of BAE Systems, said: “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.

“With a record order backlog and good operational performance, we’re well positioned to continue delivering sustained growth in the coming years.”

Aarin Chiekrie, an equity analyst at Hargreaves Lansdown, said BAE’s prospects look increasingly rosy given soaring defence budgets globally.

He said: “A strong set of first-half results have shown that BAE occupies a key space in the defence market.

“And with some of its biggest buyers, the UK, US and Europe, all expected to continue raising defence budgets over the coming years, the sky really is the limit for this jet-maker.”