BAE Systems (BA.) revealed double-digit revenue growth at the half-year mark, aided by increased sales of high-tech equipment for the Eurofighter and favourable exchange rates. Underlying profits of £800m were virtually unchanged from a year ago, but it was a creditable result for Europe's biggest defence contractor given the scale of retrenchment in its traditional markets.
There are signs that defence remits could now increase in BAE's core markets, but the group has successfully diversified its offering to include lucrative civil and commercial activities such as aerospace and cyber-security. BAE will now supply the full electronics for the 'fly-by-wire' system (which replaces manual flight controls) on Boeing's new generation 777X wide-body jet range, for example.
Nevertheless, the group continues to make progress on the Royal Navy's Type 26 frigate programme, and is moving ahead with work on the F-35 Joint Strike Fighter. Critically, BAE is still eyeing potential new orders for the Typhoon jet fighter from Saudi Arabia and other customers in the Middle East. BAE hasn’t secured any new orders for the aircraft for three years, in contrast to its French rival Dassault, which has recently been stacking up orders for its cheaper Rafale fighters.
Prior to these figures, JPMorgan Cazenove anticipated adjusted 2015 EPS of 39.6p, against 38p in 2014.
| BAE SYSTEMS (BA.) | ||||
|---|---|---|---|---|
| ORD PRICE: | 476p | MARKET VALUE: | £5.1bn | |
| TOUCH: | 476-477p | 12-MONTH HIGH: | 549p | LOW: 415p |
| DIVIDEND YIELD: | 4.3% | PE RATIO: | 21 | |
| NET ASSET VALUE: | 68p* | NET DEBT: | 90% | |
| Half-year to 30 Jun | Turnover (£bn) | Pre-tax profit (£m) | Earnings per share (p) | Dividend per share (p) |
|---|---|---|---|---|
| 2014 | 7.61 | 541 | 13.5 | 8.2 |
| 2015 | 8.47 | 508 | 12.3 | 8.4 |
| % change | +11 | -6 | -9 | +2 |
Ex-div: 22 Oct Payment: 30 Nov *Includes intangible assets of £9.87bn, or 312p a share. | ||||
