- Europe’s largest defense contractor revealed its sales rose 9% to £25.3bn.
- Marine sales provided almost half of all growth, rising 22% to £5.5bn.
BAE Systems’ profits beat expectations last year as governments continued to increase military spending to counter growing geopolitical threats.
Sales at Europe’s largest defense contractor rose 9 per cent at constant currency levels to £25.3bn in 2023, £2bn above forecasts, thanks to increased trade across all sectors.
Shipping-related sales provided almost half of all growth, rising 22 per cent to £5.5bn due to funding for the UK’s Dreadnought nuclear submarine programme.
Strong result: BAE Systems revealed its sales rose 9 per cent at constant currency levels to £25.3 billion in 2023, £2 billion ahead of forecast, thanks to increased trade in all sectors.
Sales of electronic systems also soared to £5.5bn 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 rise 9 per cent to £2.7 billion, compared with previous forecasts of 6 to 8 per cent growth.
BAE Systems expects even better results this year, with underlying sales and earnings forecast to rise by double-digit percentage levels.
As a result, it announced a final dividend of 18.5 per share, bringing its total annual dividend to 30 pence per share, a jump of 11.1 per cent from the previous year.
Defense giants have seen their orders increase in recent years as countries have bolstered defense budgets following the outbreak of the Ukraine war and rising tensions between Taiwan and Beijing.
BAE’s order book hit a record £69.6 billion in 2023 after winning contracts to provide support services for Typhoon aircraft in Saudi Arabia.
The group also secured deals with the Ministry of Defense (MoD) worth £3.95bn to work on the SSN-AUKUS submarine program and £410m to make battlefield munitions.
Charles Woodburn, chief executive of BAE, commented: “Our performance, combined with our global presence and record order intake, means we are well positioned for sustained growth over the coming years.”
As part of its expansion efforts, BAE recently bought the aerospace division of Colorado-based Ball Corporation for approximately $5.6 billion (£4.4 billion).
Ball Aerospace builds equipment such as spacecraft, antenna systems, weather monitoring systems and parts for the Hubble Space Telescope.
BAE’s acquisition of the segment reinforces its considerable presence in the United States, which has the world’s largest military budget and passed an $886 billion national defense spending bill in December.
Aarin Chiekrie, equity analyst at Hargreaves Lansdown, said: ‘Ball has unique positions in critical space and nuclear deterrent technologies, and the deal looks like a good strategic choice.
“The new business should improve growth and margins, contributing positively to the group’s expectations.”
He added: “Against a backdrop of heightened global tensions and growing military budgets, the sky looks bright for this aircraft manufacturer.”
BAE Systems Stock fell 3.6 per cent to 1,208.5p on Wednesday morning, but is still up around 165 per cent in the last five years.
