BAE Systems' (BA.) new chief executive Charles Woodburn presented an encouraging set of figures at the half-year mark, with a 4 per cent rise in revenue at constant currencies and underlying profit up 5 per cent on the same basis to £945m. Full-year guidance remains unchanged, with EPS expected to be 5-10 per cent higher than 2016, despite lower assumptions on the US dollar rate and "some softening" in cyber and intelligence turnover – plus a restructuring charge here – expected in the second half.
The threat posed by asymmetrical warfare in its digitalised form is intensifying, with counter measures now a strategic priority among defence planners, not to mention commercial cyber security. BAE has a focused investment programme to reignite revenues here.
Underlying profits improved across all the group’s divisions, though margins at the large UK platforms and services unit tightened. The defence giant continued deliveries of the Eurofighter Typhoon for the Royal Air Force, while assembly of the second ship in the Queen Elizabeth Class aircraft carrier programme is well under way. Production of rear fuselage assemblies on the much criticised F-35 Lightning II fighter programme is picking up, with sufficient capital investment now in place to meet projected numbers.
IBES consensus forecasts give adjusted EPS of 43.6p for the December year-end, up from 40.3p in 2016.
| BAE SYSTEMS (BA.) | ||||
| ORD PRICE: | 624p | MARKET VALUE: | £19.9bn | |
| TOUCH: | 623-624p | 12-MONTH HIGH: | 683p | LOW: 515p |
| DIVIDEND YIELD: | 3.4% | PE RATIO: | 19 | |
| NET ASSET VALUE: | 109p* | NET DEBT: | 50% | |
| Half-year to | Turnover | Pre-tax | Earnings per | Dividend |
| 30 Jun | (£bn) | profit (£m) | share (p) | per share (p) |
| 2016 | 8.28 | 528 | 12.9 | 8.6 |
| 2017 | 9.01 | 714 | 17.5 | 8.8 |
| % change | +9 | +35 | +36 | +2 |
| Ex-div: | 19 Oct | |||
| Payment: | 30 Nov | |||
| *Includes intangible assets of £11.0bn, or 345p a share | ||||
