BAE Systems (BA.) didn’t exactly get off to a flying start in the six months to June, but there were signs of progress and the suggestion of momentum to come in the second half. By the group’s own non-standard measurement, sales fell from £9.5bn to £8.8bn – stemming from a decline in Typhoon production activity. Indeed, sales within the air division were down 11 per cent to £3.3bn.
But these numbers don’t include the contract signed with Qatar in June to supply Typhoon and Hawk aircraft – nor an initial contract for Australia’s SEA 5000 frigate programme. Similarly, while the order backlog rose from £38.7bn to £39.7bn, this didn’t reflect the respective deals which are expected in the second half.
Management maintained its full-year guidance, still anticipating underlying EPS in-line with 2017. This is thanks to an expected improvement in earnings from the electronic systems division, and cyber and intelligence, mitigating certain challenges faced by the maritime and platforms-and-services businesses.
Within maritime, the order backlog rose from £9.1bn to £9.5bn. But performance issues on the Offshore Patrol Vessels programme led to a £15m loss provision. Meanwhile, platforms and services took a charge relating to challenges with a subcontractor on its Radford facilities programme.
Prior these results, JPMorgan was forecasting for adjusted EPS of 43.4p in 2018, against 43.5p in 2017.
| BAE SYSTEMS (BA) | ||||
| ORD PRICE: | 641p | MARKET VALUE: | £ 20.5bn | |
| TOUCH: | 641-641.4p | 12-MONTH HIGH: | 680p | LOW: 534p |
| DIVIDEND YIELD: | 3.4% | PE RATIO: | 27 | |
| NET ASSET VALUE: | 182p* | NET DEBT: | 33% | |
| Half-year to 30 Jun | Turnover (£bn) | Pre-tax profit (£m) | Earnings per share (p) | Dividend per share (p) |
| 2017** | 8.92 | 734 | 17.9 | 8.8 |
| 2018 | 8.16 | 571 | 14.8 | 9.0 |
| % change | -8 | -22 | -17 | +2 |
| Ex-div: | 18 Oct | |||
| Payment: | 30 Nov | |||
| *Includes intangible assets of £10.5bn, or 329p a share**2017 numbers have been restated, reflecting the group's adoption of IFRS 15 | ||||
