BAE Systems Backs Guidance as Defense Spending Remains High — Update
By Mauro Orru
BAE Systems confirmed its forecasts that sales and earnings will continue to grow this year as governments rush to secure military hardware in the face of escalating geopolitical tensions.
The U.K. defense-and-aerospace group said on Thursday that its performance had been in line with expectations so far this year, with defense spending remaining high across its key markets.
"Our global presence and diverse portfolio of products and services provide high visibility for top-line growth, margin expansion and cash generation in the coming years," said Chief Executive Charles Woodburn.
BAE Systems makes combat vehicles, ammunition, missile launchers and artillery systems, including the M777 howitzer that has been widely used by Ukraine in its fight against Russia. The group also provides cybersecurity services, electronic warfare and night vision systems, surveillance and reconnaissance sensors.
Like many of its European rivals, BAE has witnessed sustained growth in the last two years or so. Its share price surged to GBP13.82 from roughly GBP6.00 in the days prior to Russia's invasion of Ukraine, handing the group a market value of nearly GBP41.94 billion, according to FactSet.
Members of the North Atlantic Treaty Organization are turning to arms manufacturers to replenish their stockpiles after diverting significant caches of weapons and military equipment to Ukraine.
BAE is forecasting a 10% to 12% increase in sales this year from the 25.28 billion pounds ($31.59 billion) it reported for 2023, while free cash flow should exceed GBP1.3 billion.
Underlying earnings before interest and taxes--the group's preferred measure of profitability--are expected to grow 11% to 13% from last year's GBP2.68 billion. Underlying earnings per share, another closely watched metric by analysts and investors, are projected to rise 6% to 8% from 63.2 pence.
Write to Mauro Orru at mauro.orru@wsj.com
(END) Dow Jones Newswires
May 09, 2024 02:44 ET (06:44 GMT)
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