BAE Systems 1st Half Pretax Profit Rose; Demand Backlog to Boost Growth -- Update
July 29 2021 - 4:20AM
Dow Jones News
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)
Copyright (c) 2021 Dow Jones & Company, Inc.
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