- Europe’s largest defence contractor revealed its sales rose by 9% to £25.3bn
- Maritime sales provided nearly half of all growth, jumping by 22% to £5.5bn
BAE Systems profits surpassed expectations last year as governments continued ramping up military spending to counter heightened geopolitical threats.
Europe’s largest defence contractor’s sales rose by 9 per cent at constant currency levels to £25.3billion in 2023, £2billion ahead of guidance, thanks to increasing trade across all sectors.
Maritime-related sales provided nearly half of all growth, jumping by 22 per cent to £5.5billion due to funding for the UK’s Dreadnought nuclear submarine programme.
Strong result: BAE Systems revealed its sales rose by 9 per cent at constant currency levels to £25.3billion in 2023, £2billion ahead of guidance, thanks to increasing trade across all sectors
Sales of electronic systems also shot up to £5.5billion thanks to a rebound in commercial airline travel, as well as high demand for electronic combat systems.
The trading performance helped the company’s underlying profits expand by 9 per cent to £2.7billion, compared to previous forecasts for 6 to 8 per cent growth.
BAE Systems expects to do even better this year, with sales and underlying earnings both forecast to swell by double-digit percentage levels.
As a result, it announced an 18.5 per share final dividend, taking its total annual dividend to 30p per share, an 11.1 per cent leap on the previous year.
Defence giants have seen their orders surge in the past few years as countries have bolstered defence budgets following the outbreak of the Ukraine war and mounting tensions between Taiwan and Bejing.
BAE’s order backlog stood at a record £69.6billion in 2023 after it won contracts to provide support services for Typhoon aircraft in Saudi Arabia.
The group also gained deals from the Ministry of Defence (MoD) worth £3.95billion for work on the SSN-AUKUS submarine programme and £410million to manufacture battlefield munitions.
Charles Woodburn, chief executive of BAE, remarked: ‘Our performance, combined with our global footprint and record order intake, means we’re well-positioned for sustained growth in the coming years.’
As part of its expansion efforts, BAE recently bought the aerospace division of Colorado-based Ball Corporation for approximately $5.6billion (£4.4billion).
Ball Aerospace constructs equipment such as spacecraft, antenna systems, weather monitoring systems, and parts for the Hubble Space Telescope.
BAE’s takeover of the segment bolsters its considerable presence in the US, which has the world’s largest military budget and passed an $886billion national defence spending bill in December.
Aarin Chiekrie, equity analyst at Hargreaves Lansdown, noted: ‘Ball has unique positions in critical space and nuclear deterrence technologies, and the deal looks like a good strategic fit.
‘The new business should enhance top-line growth and margins, contributing positively to the group’s expectations.’
He added: ‘Against a backdrop of elevated global tensions and rising military budgets, the sky’s looking bright for this jet-maker.’
BAE Systems shares fell 3.6 per cent to 1,208.5p on Wednesday morning, but have still climbed by around 165 per cent over the past five years.
