BAE Systems Expects Strong Growth, Driven by Heightening Geopolitical Risk — Update

By Anthony O. Goriainoff

BAE Systems expects to report another year of robust sales and earnings growth and strong cashflow generation due to heightened geopolitical risk, and backed its full-year guidance.

The U.K. defense-and-aerospace group said Monday that order flow on both new and existing programs remains strong, underpinning expectations for good top-line growth in the coming years.

BAE said that it has booked more than 30 billion pounds ($36.68 billion) of orders so far this year, including around $800 million for Bradley fighting vehicles used by the U.S. Army as well as upgrades. Orders also include around $500 million for Sweden's Archer artillery system, and $797 million to start full-rate production of the armored multi-purpose vehicle--which includes prior funding for early order materials--for the U.S. Army.

"The high order flow reflects continued customer confidence in our ability to deliver important capabilities at a time of heightening geopolitical risk," the company said.

In August, the board raised its sales growth guidance to a 5% to 7% range from previous guidance of 3% to 5%. Sales in 2022 came to GBP23.26 billion. Underlying earnings before interest and taxes are now seen rising by between 6% and 8%, up from a range of 4% to 6%, while free cash flow is seen slipping to GBP1.8 billion from GBP1.95 billion in 2022. BAE reported underlying EBIT of GBP2.48 billion in 2022.

The company said most major defense programs were long term in the build and support phases, and that as a result of this the contracts it secures now will be executed over many years, giving it long-term visibility of its top-line growth.

Shares at 0934 GMT were up 6.50 pence, or 0.6%, at 1,110 pence.

Write to Anthony O. Goriainoff at anthony.orunagoriainoff@dowjones.com

(END) Dow Jones Newswires

November 13, 2023 05:04 ET (10:04 GMT)

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