BAE Systems orders soar to £25bn due to global military spending

BAE Systems shares rose on Tuesday as the defense giant’s order book continues to rise thanks to booming global military spending.

The FTSE 100 firm has secured orders worth £25bn this financial year, up from £15bn just six months ago and puts BAE on track to hit its full-year targets, with 90 percent of projected 2024 revenue already covered.

BAE shares have risen more than 115 percent since Russian tanks entered Ukraine on February 24, 2022, but reports in September that NATO allies were starting to talk about a negotiated ceasefire slowed the rise. investor enthusiasm.

But more recent reports suggest an imminent renewal of European defense spending following the election of Donald Trump in the United States.

And on Tuesday, BAE Systems stuck to its upgraded guidance for the year of a 12 to 14 percent rise in revenue and underlying operating profit.

It said “strong visibility” into its order book and “backlog of existing positions” supports its long-term growth prospects.

It highlighted notable contract awards in the second half of the year, including a $493 million deal to continue producing self-propelled howitzers and ammunition carriers.

BAE was also boosted by the integration of its Space & Mission Systems business, with sales “accelerating in the second half of the year with incremental group margins”.

CEO Charles Woodburn said: ‘Focusing on operational excellence, hiring discipline and growing our workforce allows us to consistently deliver critical capabilities and technologies to our customers around the world.

“At the same time, we continue to invest in our business for the long term, which, together with our broad geographic and domain diversity, positions us well for continued growth in the years ahead.”

BAE Systems Stock They rose 1 percent to 1,408 pence, having added 26.3 percent since the beginning of the year.

Jarek Pominkiewicz, industry analyst at Quilter Cheviot, said: “With the UK government increasing its defense spending and global initiatives such as the UK, Italy and Japan fighter jet program gaining ground, BAE is set to benefit from a tailwind throughout the industry.

‘The backdrop is only strengthened by growing calls for European and Asian allies to increase their own military investments.

‘In terms of valuation, BAE shares may look expensive compared to historical averages, but they remain competitive against their US defense peers.

“The stock is currently trading at a level that reflects both its current strength and future growth prospects, although it is worth noting that BAE has also outperformed its sector, achieving a 9 per cent gain since the summer.”