BAE Systems eyes ‘positive momentum’ from UK defence spending commitment

It came as the boss of the London-listed arms firm said it has seen a ‘strong’ operational performance and is on track to meet its targets.

A model of the new Tempest fighter jet after being unveiled by BAE Systems which has said it is on track to meet its targets for the year (Adam Matthews/PA) (PA Archive)

BAE Systems has said a UK Government commitment for defence spending by 2030 and the recent US military aid deal for Ukraine should give the defence giant “further positive momentum”.

It came as the boss of the London-listed arms firm said it has seen a “strong” operational performance and is on track to meet its targets for the year.

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

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

Charles Woodburn, BAE Systems

It said it is also predicting underlying earnings growth of between 11% and 13% 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% 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 as part of his Government’s commitment.

On Thursday, BAE highlighted a number of major contract awards including a 754 million US dollar (£604 million) 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 £4.4 billion.

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.”