BAE Systems slightly lifts profit forecast as orders beat expectations
BAE Systems slightly raised its earnings forecast for the full year, with the defence company saying demand for its products had remained high throughout the Covid-19 crisis.
In an update to the stock exchange this morning, the group kept its full-year guidance for sales and cashflow unchanged, but said it now expects earnings per share to be slightly higher than previous guidance.
BAE had previously yorecast underlying earnings per share to be a mid-single digit percentage lower than last year’s result of 45.8p, but said today they would be higher thanks to “good operational performance and an expected lower tax rate offsetting the negative foreign exchange impact”.
“We have continued to deliver a resilient performance in line with our expectations for a strong second half, thanks to the outstanding efforts of our employees in these challenging times,” said chief executive Charles Woodburn.
“Demand for our capabilities remains high and we recognise our role not only in supporting national security, but also in contributing to the economies of the countries in which we operate,” Woodburn added.
BAE said that its order intake expectations were ahead of its original pre-pandemic planning for 2020.
“Our large order backlog and incumbent programme positions are expected to lead to strong and profitable top line growth with increasing cash conversion in the coming years,” it said.
The company said its US-based portfolio “remains well aligned to customer priorities and growth areas”, and it expects this to continue under the new administration following Joe Biden’s victory in the presidential election.
BAE said it sees a stable outlook for its UK operations, with revenues focused on “long-term, contracted and critical defence programmes in the Air and Maritime domains”.
It added that the near-term impact of Brexit on its business was “likely to be limited” as BAE conducts limited trading between the UK and EU, and the majority of its UK workforce are British nationals.
BAE Systems will pay an interim dividend of 9.4p per share on 30 November.