LONDON (ShareCast) - (Sharecast News) - BAE Systems reported better-than-expected full-year profits and said sales would grow further this year as the rise in geopolitical tensions drove increases in military spending by governments.
The British arms maker said it expected a 10 -12% rise in sales in 2024 compared with the £25.28bn reported last year. Almost half of its revenues come from the US.

"Our performance, combined with our global footprint and record order intake, means we're well-positioned for sustained growth in the coming years," said chief executive Charles Woodburn.

BAE also announced an 11% rise in its annual dividend to 30p a share.

Operating profit on an underlying basis rose 9% to £2.68bn. Underlying earnings per share came in at 63.2 pence, up 14% and beating guidance of a 10-12% rise.

"We continue to focus on increased long-term demand from the US and international customers. The uplift in European and allied countries' defence spending is in addition to our strong order backlog on key franchise programmes," BAE said on Wednesday.

In December, the company secured a 10-year contract worth up to $8.8bn to manage the US Army's main ammunition plant in Tennessee as efforts continue to increase production of artillery shells, missiles and other weapons.

"Our focus on operational excellence continues to benefit our customers and shareholders, especially as we execute on complex, long-duration programs like Dreadnought, Type 26 and Hunter Class frigates, Typhoon and F-35 jets, electronic warfare systems, combat vehicles, and many other programs," it added.

Aarin Chiekrie, equity analyst at Hargreaves Lansdown said on an absolute basis, US military spending "trumps any other country in the world, so having a large exposure here is proving very beneficial and has helped the group bring in a record £37.7bn worth of orders in 2023".

"But BAE Systems isn't stopping there. The UK's largest defence contractor sealed the deal on its £4.4bn acquisition of US-based Ball Aerospace last week, which should further increase its footprint on the other side of the pond."

"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 for sales and profits to rise at double-digit rates this year."

Reporting by Frank Prenesti for Sharecast.com

Email this article to a friend

or share it with one of these popular networks:

• DIGG
• FACEBOOK
• STUMBLEUPON
• MIXX
• YAHOO BUZZ
• DELICIOUS
• REDDIT
• NEWSVINE