BAE Systems anticipates ‘positive momentum’ from defence spending commitment

BAE said its forecasts remain unchanged and, therefore, is on track to deliver sales growth of between 10 per cent and 12 per cent this year.

It said it is also predicting underlying earnings growth of between 11 per cent and 13 per cent for the year.

The group said it is currently witnessing “high” levels of defence spending across its sectors and key markets.

“The recent passing of the US supplemental aid package to Ukraine and the commitment by the UK Government to spend 2.5 per cent of GDP by 2030 should build further positive momentum,” it added.

Last month, Prime Minister Rishi Sunak promised an extra £75 billion in defence spending over the next six years.

Mr Sunak said he had made a choice to “prioritise defence”, adding: “I think that’s the right thing because, whether we like it or not, the world is more dangerous than at any moment since the Cold War.”

On Thursday, BAE highlighted a number of major contract awards including a £604m production deal for armoured multi-purpose vehicles.

It also highlighted that it is currently integrating the Ball Aerospace business it acquired earlier this year, for around £4.4bn.

It said the business, which has been renamed Space & Mission Systems has made a “good start” to the year.

Charles Woodburn, BAE Systems chief executive, said: “Trading so far this year has been in line with expectations.

“Operational performance continues to be strong and our backlog and programme incumbencies underscore our confidence in our long-term value-creating model.

“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.”

Commenting on global market trends, Victoria Scholar, the head of investment at interactive investor said: “In terms of corporate updates, BAE Systems said it’s on track to meet its full-year guidance for higher earnings, driven partly by a recent commitment from the UK government to raise its defence spending.

She added: “Overnight, China’s exports rose by 1.5 per cent year-on-year, ahead of expectations for 1 per cent and a major rebound from March’s 7.5 per cent slide.

"Imports gained 8.4 per cent, also beating forecasts for 5.4 per cent.”