BAE Systems anticipates its earnings will rise five to 10 per cent this year as its key markets ramp up defence spending.
In the year to the end of December 2016, the leading weapons and aviation group said sales increased to £19.02bn from £17.9bn the previous year, almost all of which was due to foreign exchange rates.
Underlying earnings per share increased seven per cent to 40.3p, meeting expectations.
Operating profit jumped 10 per cent to £1.74bn from £1.5bn in 2015 on a constant currency basis, and underlying core earnings lifted to £1.91bn from £1.68bn.
The group reported an order intake of £22.44bn in 2016, up from £14.92bn the previous year, and an backlog worth £42bn, up from £36.8bn.
BAE Systems' dividend increased two per cent to 21.3p from 20.9p.
Shares in the FTSE 100-listed company edged up 1.76 per cent at 616.16p in early afternoon trading.
Why it's interesting
In 2017, BAE's underlying earnings per share are expected to be five to 10 per cent higher than this year's 40.3p per share, the company said in its statement today.
The firm's outlook has improved as many of its major markets plan to increase defence budgets. US President Donald Trump is one world leader who has prioritised such spending, and chief exec Ian King said he was "clearly committed" to having strong American defence forces.
More than a third of BAE Systems' sales come from the US, where it has many major, long-term deals.
BAE has also benefited from the UK's recent push to increase foreign trade following the EU referendum. King travelled to Turkey with Prime Minister Theresa May to sign a £100m defence deal under which BAE systems will manufacture fighter jets for Turkey.
BAE announced yesterday Charles Woodburn would replace King as chief executive who is retiring at the end of June. Woodburn is currently chief operating officer.
What BAE Systems said
King said: "Our strategy is well defined; we have a large order backlog, long-term programme positions, strong programme execution and a well-balanced portfolio. With an improved outlook for defence budgets in a number of our markets, we are well placed to continue to generate attractive returns for shareholders."
What analysts said
Andy Chambers, analyst at Edison Investment Research, said King leaves BAE in a healthy condition, and shareholders should be grateful to him.
Chambers said: "The dividend has continued to grow, notwithstanding the pension deficit concerns, and the share price is up by 25 per cent from the starting point and has more than doubled from the lows in 2011.
"With defence spending now on the rise the share price is at its high for the 21st century. Now if only the discount rate would rise, even the pension accounting deficit might become less onerous."