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BAE Systems Raises Full-Year Guidance after Strong First Half Results

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BAE Systems, the U.K. defense-and-aerospace group, has reported a significant increase in pretax profit and revenue for the first half of the year, driven by record order books. As a result, the company has raised its full-year guidance. Here are the key details:

Revenue

  • BAE Systems reported a revenue of £11 billion ($14.05 billion) for the first half, compared to £9.74 billion for the same period last year.
  • This revenue figure falls within the company’s projected range of between £11 billion and £11.39 billion.

Underlying EPS

  • BAE Systems’ underlying earnings per share, which excludes exceptional and other one-off items, rose to 29.6 pence from 24.5 pence.
  • The consensus range for underlying earnings per share was 24.3 pence to 27.3 pence.

Guidance

  • BAE Systems now expects sales to increase between 5% and 7% for the full year, up from the previous guidance of 3% to 5%.
  • This growth is driven by accelerated spending on the U.K. Dreadnought-class submarine program, as well as strong demand and operational performance across all sectors.
  • The company also anticipates underlying earnings before interest and taxes to grow between 6% and 8%, compared to the previous range of 4% to 6%.
  • Furthermore, the guidance for underlying earnings per share has been raised to 10% to 12%, up from 5% to 7%.

Orders

  • BAE Systems reported a record order intake of £21.1 billion, surpassing £18 billion from last year.
  • This has resulted in a record order backlog of £66.2 billion.
  • The company is optimistic about the continued strong order flow for the remainder of the year.

Share Buybacks

  • BAE Systems has announced a further share buyback program of up to £1.5 billion.
  • Analysts believe that this move indicates a temporary halt on any large mergers or acquisitions, such as the rumored deal for Ball Aerospace.
  • However, this decision is seen positively as it alleviates concerns about the significant price tag associated with such a deal.

BAE Systems’ impressive first half results and optimistic outlook for the rest of the year demonstrate its strong position in the defense and aerospace industry.

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