Thrifty military customers, a strong pound and the absence of last year's one-off price settlement for 72 Typhoon jet fighters prompted a fall in revenue at BAE Systems (BA.), sending adjusted cash profit down 12 per cent to £1.7bn. Nonetheless, chief executive Ian King is bullish that the defence, aerospace and security group will benefit from a long-overdue recovery in global defence markets.
Buoyed by President Obama's proposal to increase military spending, Mr King reckons earnings will be "marginally higher" in the year ahead. Steadier US and UK markets, together with growing demand from Saudi Arabia, are reflected in the "multi-year visibility" of BAE's order book. True, order backlog shrank 5 per cent to £40.5bn but momentum is evident from the slew of big deals: BAE will provide flight-control systems for Boeing's 777x aircraft and armoured vehicles for the US army.
Orders from burgeoning overseas markets such as Australia and Saudi Arabia amounted to £4.3bn. BAE also posted gains in its emerging cyber security division: order backlog in the Applied Intelligence business grew 37 per cent in the year, and its acquisition of SilverSky has bolstered access to the lucrative US market.
Broker Investec Securities anticipates adjusted 2015 EPS of 38.7p, rising to 39.0p in 2016.
| BAE SYSTEMS (BA.) | ||||
|---|---|---|---|---|
| ORD PRICE: | 519p | MARKET VALUE: | £16.4bn | |
| TOUCH: | 518-519p | 12-MONTH HIGH: | 533p | LOW: 374p |
| DIVIDEND YIELD: | 3.9% | PE RATIO: | 22 | |
| NET ASSET VALUE: | 58p* | NET DEBT: | 55% | |
| Year to 31 Dec | Turnover (£bn) | Pre-tax profit (£bn) | Earnings per share (p) | Dividend per share (p) |
|---|---|---|---|---|
| 2010 | 22.3 | 1.41 | 30.5 | 17.5 |
| 2011 | 19.2 | 1.47 | 37.0 | 18.8 |
| 2012 | 17.9 | 1.20 | 29.3 | 19.5 |
| 2013 | 18.2 | 0.42 | 5.2 | 20.1 |
| 2014 | 16.6 | 0.88 | 23.4 | 20.5 |
| % change | -9 | +110 | +350 | +2 |
Ex-div: 16 Apr Payment: 1 Jun *Includes intangible assets of £10bn, or 317p a share | ||||
