BAESY Bae Systems Plc (PK)

By Anthony O. Goriainoff

BAE Systems PLC said Thursday that pretax profit rose and launched a buyback program, while noting that a demand backlog should support the company's growth expectations in the coming years.

The London-listed defense company said it was launching a buyback program of up to 500 million pounds ($695.1 million) as it reported a rise in pretax profit for the first half of the year.

The buyback program was possible due to BAE's decision to accelerate its U.K. deficit pension payments in 2020, coupled with investment in the business and good operational performance driving enhanced cash generation, it said.

The company said its pipeline of opportunities across all the sectors where it operates remains strong. BAE is prominent in many long-term defense programs for the U.S. armed forces, while several European nations have continued to increase their defense budgets as they move toward their 2% of GDP NATO commitments.

It added that in the U.K. it has seen renewed commitments to its major long-term programs such as warship, submarine, and combat aircraft design and build.

"Our geographic diversity positions us strongly in the post-pandemic cycle where many of the countries in which we operate have made plans to increase their spending to counter the challenging threat environments," the company said.

BAE said that, for the six months ended June 30, pretax profit was GBP1.15 billion compared with GBP689 million for the first half of 2020.

Underlying earnings per share--the company's preferred metric, which strips out exceptional and other one-off items--rose to 21.9 pence a share from 18.7 pence a share in the year-prior period.

The company's order intake in the period was GBP10.58 billion, compared with GBP9.34 billion last year, while its backlog totaled GBP44.6 billion.

Revenue for the period was GBP9.34 billion compared with GBP9.18 billion the year before.

The company said its Electronics Systems division performed strongly and benefited from last year's acquisitions. It added that the civil market operations which had been most affected by the pandemic have stabilized, and that it was seeing a recovery in the commercial Controls & Avionics Solutions and Power & Propulsion Solutions businesses.

BAE said it expects group sales to grow in the 3% to 5% range over 2021, based on a strong pound-to-dollar exchange rate.

"If these higher currency rates persist in line with the first-half average rates, we expect reported sales to be at the lower end of this guidance range," it said.

Write to Anthony O. Goriainoff at anthony.orunagoriainoff@dowjones.com

(END) Dow Jones Newswires

July 29, 2021 04:12 ET (08:12 GMT)

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