FTSE 100 weapons builder BAE Systems has reaffirmed its full-year trading guidance thanks to continued robustness in the global defence market.
At £13.90 per share, the BAE Systems share price was 0.6% higher in Thursday’s session.
The company said it remains on course to grow sales between 10% and 12% in 2024, while underlying earnings before interest and tax (EBIT) is tipped to increase between 11% and 13%.
Full-year free cash flow is predicted to be greater than £1.3 billion. This came in at £2.6 billion in 2023.
Cumulative free cash flow between 2024 and 2026 is still expected to total above £5 billion.
Strong Demand
Demand for BAE Systems’ hardware is soaring, with Western governments ramping up defence spending following Russia’s invasion of Ukraine just over two years ago.
The company’s share price has soared around 150% since the start of 2022 as revenues and orders have rocketed.
Last year, the business reported record orders of £37.7 billion, up around £600 million year on year.
As a consequence, its order backlog to £69.8 billion, a substantial improvement from £58.9 billion a year earlier.
BAE commented today that “defence spending is high across our 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% of GDP by 2030 should build further positive momentum.”
On The Ball
In other news, BAE Systems announced on Thursday that its Ball Aerospace unit has been renamed as Space & Mission Systems. It acquired the division for $5.6 billion in February.
The Footsie company said that “the integration programme is underway and the business has had a good start to the year, securing a number of key contracts.”
BAE also said that it expects capital expenditure to rise from 2023 levels, with spending to be “focused on maritime, munitions and our Swedish combat vehicle production capacity and capabilities.”
The firm also said it plans to hire a record 2,700 new apprentices, graduates and undergraduates to support its growth plans.
Positive Outlook
Chief executive Charles Woodburn said that “trading so far this year has been in line with expectations,” noting that “operational performance continues to be strong and our backlog and programme incumbencies underscore our confidence in our long-term value-creating model.”
He added that “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.”
