- Europe’s largest defense contractor announced its turnover rose 9% to £25.3 billion
- Maritime revenue accounted for almost half of all growth, up 22% to £5.5 billion
BAE Systems’ profits exceeded expectations last year as governments continued to ramp up military spending to counter increased geopolitical threats.
Sales of Europe’s largest defense contractor rose 9 percent at constant exchange rates to £25.3 billion in 2023, £2 billion more than expected, thanks to increasing trade across all sectors.
Maritime revenue accounted for almost half of all growth, rising 22 percent to £5.5 billion thanks to funding for the UK’s Dreadnought nuclear submarine programme.
Strong performance: BAE Systems announced constant currency sales up 9 percent to £25.3 billion in 2023, £2 billion more than expected, thanks to increasing trade across all sectors
Sales of electronic systems also shot up to £5.5 billion thanks to a recovery in commercial air travel and high demand for electronic combat systems.
The trading performance helped the company’s underlying profit grow by 9 percent to £2.7 billion, compared to previous forecasts of growth of 6 to 8 percent.
BAE Systems expects to do even better this year, with both revenue and underlying profits expected to rise by double digits.
As a result, it declared a final dividend of 18.5 per share, bringing its total annual dividend to 30 cents per share, an increase of 11.1 percent on the previous year.
Defense giants have seen their orders rise in recent years as countries have increased their defense budgets following the outbreak of war in Ukraine and rising tensions between Taiwan and Beijing.
BAE’s order book reached a record £69.6 billion in 2023 after it won contracts to provide support services for Typhoon aircraft in Saudi Arabia.
The group also secured deals from the Ministry of Defense (MoD) worth £3.95 billion for work on the SSN-AUKUS submarine program and £410 million for battlefield munitions production.
Charles Woodburn, CEO of BAE, commented: ‘Our performance, combined with our global footprint and record orders, means we are well positioned for sustainable growth in the years ahead.’
As part of its expansion efforts, BAE recently purchased the aerospace division of Colorado-based Ball Corporation for around $5.6 billion (£4.4 billion).
Ball Aerospace builds equipment such as spacecraft, antenna systems, weather monitoring systems and components for the Hubble Space Telescope.
BAE’s acquisition of this segment strengthens its significant presence in the US, 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, commented: ‘Ball has unique positions in critical space and nuclear deterrent technologies, and the deal appears to be a good strategic fit.
‘The new company should improve sales growth and margins and make a positive contribution to the group’s expectations.’
He added: ‘Against a backdrop of heightened global tensions and rising military budgets, the skies look bright for this aircraft manufacturer.’
BAE Systems shares fell 3.6 percent to 1,208.5 cents on Wednesday morning, but is still up about 165 percent over the past five years.
